Cyprus’ financial regulator, the Cyprus Securities and Exchange Commission(CySEC), has extended the suspension of FTX (EU) Ltd’s Cyprus Investment Firm (CIF) license. On November 5th, CySEC issued a notice that the suspension had been extended to May 30, 2025, to enable FTX Europe time to adhere to Cyprus’s investment regulations.
FTX (EU) Ltd had operated under EU regulations for only eight months before its license was suspended following FTX’s Chapter 11 bankruptcy filing in the U.S. CySEC cited concerns over the firm’s management suitability and the need to protect client assets. During this period, a significant $600 million crypto hack reportedly affected FTX’s operations.
FTX Europe emerged from the Swiss startup Digital Assets AG, which Future Exchange bought for about $400 million in 2021. According to legal actions taken by plaintiffs, the acquisition, led by Sam Bankman-Fried and his associates, was made through Alameda Research for $376 million despite DAAG’s limited business and no significant assets.
FTX’s Bankruptcy, Legal Concerns, and Regulatory Changes
In July 2023, plaintiffs filed a complaint in the United States Bankruptcy Court, seeking to recover the $376 million spent on the acquisition. They argue that the purchase was a poor investment, as DAAG only had a business plan and no intellectual property. Future Exchange executives aimed to enhance their European regulatory presence by owning a local company.
Last month, doctors submitted an amicus brief supporting Sam Bankman-Fried’s appeal, citing his neurodivergence disorders as a possible influence on his criminal trial. Diagnosed with autism and ADHD, the Future Exchange co-founder faced significant challenges during the proceedings. The brief, signed by eight neurodivergence specialists, noted rulings harmful to him due to his conditions.
The court applied for this declaration in October 2022, and bankruptcy experts expressed concerns about the procedural intersection between FTX’s bankruptcy proceedings and the trial of its founder, Bankman-Fried. They cautioned that collaboration between FTX’s bankruptcy estate and the prosecution could pose a threat, encouraging the use of Chapter 11 cases to reinforce criminal cases.
CySEC also stated that on October 30, 2024, it would cease to receive such notice from European Economic region firms for cross-border crypto services. This decision, part of a transitional phase preceding the new EU crypto rules, allows firms operating under CySEC’s regime to continue until July 2026, pending MiCA approval.
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