Key Takeaways
- CySEC stated that the continued pause on operations will provide the time needed for FTX Europe to comply with Cyprus’s investment and market laws
- FTX is prohibited from executing any orders from clients for buying financial instruments or to provide any investment services in or outside Cyprus.
Cyprus Securities and Exchange Commission (CySEC) has extended the suspension of FTX Europe’s investment license for another six months, pushing the crypto exchange’s restrictions through May 30, 2025.
This decision marks the fourth time the regulator has renewed FTX Europe’s license suspension since November 2022. The initial suspension came just as the parent company FTX filed for bankruptcy in the United States
The extended suspension bars FTX Europe from offering investment services, entering new business transactions, or taking on new clients. However, FTX Europe remains authorized to manage outstanding transactions and allow existing customers to withdraw funds.
CySEC stated that the continued pause on operations will provide the time needed for FTX Europe to comply with Cyprus’s investment and market laws, in line with heightened European regulatory expectations.
FTX Europe has faced significant challenges since the downfall of its parent company, FTX, which filed for Chapter 11 bankruptcy in the U.S. in November 2022. As part of that fallout, FTX Europe’s license was initially frozen by CySEC, which cited concerns over “the suitability of the members of the management body” and the need to protect client assets. Following the collapse, FTX Europe’s website shifted to a limited-access mode, where users can log in to view balances and request withdrawals but cannot trade.
Initially launched as Digital Assets AG, a Swiss-based startup, FTX Europe was acquired by FTX in 2021 for $323 million. Following the bankruptcy proceedings, FTX’s restructuring team attempted to recoup some of the acquisition costs, which they argued was an “overpayment.” Eventually, in early 2023, they agreed to sell the European division back to its original owners for $32.7 million, only about 10% of its initial acquisition cost.
This latest regulatory move from CySEC comes as Europe prepares to implement its Markets in Crypto-Assets (MiCA) framework, expected to increase compliance requirements for crypto-related firms across the European Union.
For now, CySEC’s decision leaves FTX Europe in a holding pattern. While it allows for client transactions to be completed, the company cannot actively operate or expand its client base. In a brief statement, FTX Europe has affirmed its intention to cooperate with regulators, though it faces significant hurdles in fully resuming operations across Europe in the foreseeable future
