FTX, a cryptocurrency exchange, has faced the suspension of its license in Cyprus by the jurisdiction’s securities regulator, just two months after obtaining it. This suspension comes in the wake of a liquidity crisis that led to a freeze on withdrawals.
According to a representative from the Cyprus Securities and Exchange Commission (CySEC), “CySEC called upon the Cypriot Investment Firm FTX EU Ltd to suspend its operations and to proceed immediately with a number of actions for the protection of the investors.” It’s important to note that while FTX EU Ltd. was authorized by CySEC to provide investment services in derivatives and financial instruments, it did not hold a license to engage in direct crypto asset trading.
FTX initially secured approval for its domain www.ftx.com/eu from CySEC in March, following its acquisition of the local company K-DNA Financial Services LTD, which was subsequently renamed FTX EU LTD. In September, FTX EU claimed to have obtained a CySEC license to operate as a Cyprus investment firm, allowing it to serve the entire European Economic Area, including the EU, Iceland, Liechtenstein, and Norway.
However, following a liquidity crisis that led to the downfall of the multi-billion-dollar cryptocurrency enterprise headquartered in the Bahamas, the country’s securities regulator froze FTX’s assets in an effort to “preserve assets and stabilize the company.” This suspension in Cyprus adds to the challenges faced by the troubled exchange.