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30,000 Australian Crypto Investors Impacted by FTX’s Collapse

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Thousands of Australian crypto investors have found themselves in a precarious situation and now face the risk of losing their entire investments following the collapse of the popular crypto exchange FTX.

According to the Australian Financial Review, close to 30,000 Australian investors are now looking to recover part of their losses after the crypto trading platform declared bankruptcy.

Investors, crypto markets and regulators were caught off guard in a dramatic series of events that triggered a massive bank run and withdrawal, causing FTX to collapse due to a lack of liquidity in the week ending Nov. 13.

Shortly after reportedly halting user withdrawals due to insufficient funds, the company filed voluntary bankruptcy proceedings under Chapter 11 in the District of Delaware, the United States, on Nov. 11.

The proceedings cover FTX US, but do not include the subsidiary FTX Australia Pty Ltd.

KordaMentha, an Asia-Pacific advisory and investment firm, was appointed as the voluntary administrator of FTX Australia following the bankruptcy announcement.

The firm is now working with its U.S. counterparts on the case and is expected to retrieve some funds connected with Australian investors from FTX accounts, the Australian Financial Review reported.

Speaking about the administration process, KordaMentha said Australian FTX employees have been cooperating with the administrators.

“To date, FTX Express and FTX Australia have been completely transparent, collaborative and cooperative,” said Scott Langdon, an administrator at KordaMentha.

“Our review of the companies is ongoing, and we will continue to provide customers with updates.”

Shockwave Spreads through Crypto Markets

In the wake of FTX’s collapse, the top 10 digital coins lost over US$150 billion ($222 billion) in value.

Bitcoin prices fell below US$16,000 a coin before climbing back to around US$16,800 as of the morning of Nov. 16.

Epoch Times Photo
Then CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee on Capitol Hill, in Washington, on Dec. 8, 2021. (Photo by Alex Wong/Getty Images)

At the same time, many managers of crypto companies in Australia expressed concerns about the impact of FTX’s bankruptcy on the industry, The Australian reported.

“To lose such a prominent exchange is particularly devastating for retail investors,” said Ryan McMillin, the managing director of crypto fund manager Merkle Tree Capital.

“Exchanges are the on-ramp to crypto, and it is critical trust is re-established quickly. Otherwise, we could see a ‘bank run’ on another exchange.”

While defending crypto as a form of asset, he hoped authorities would soon come up with some legislation imposing minimum requirements for crypto exchanges and custody.

Asher Tan, the CEO of Melbourne crypto exchange CoinJar, compared the collapse of FTX to an earthquake that would continue to place significant strain on the international crypto market.

ASIC suspends FTX Australia’s licence

In a recent development, the Australian Securities & Investments Commission (ASIC) announced on Nov. 16 that it had suspended the financial services licence of FTX Australia Pty Ltd until May 15, 2023.

However, the corporate regulator said FTX Australia could continue to provide limited financial services relating to the termination of existing derivatives with clients until Dec. 19.

ASIC noted that it was monitoring the situation closely and communicating regularly with relevant parties.

It also advised impacted Australian investors to continue to keep a close eye on the situation and look out for updates from the FTX Group.

Tom Ozimek contributed to this article.

Alfred Bui

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Alfred Bui is an Australian reporter based in Melbourne and focuses on local and business news. He is a former small business owner and has two master’s degrees in business and business law. Contact him at alfred.bui@epochtimes.com.au.



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