FTX’s European licence could be suspended

Cryptocurrency exchange FTX is at risk of losing its European license after filing for bankruptcy hours ago.

FTX’s EU license in Cyprus may be suspended, putting crypto exchanges under pressure.

according to Bloomberg report, FTX Europe may suspend the license of European Union investment companies. Bloomberg said the license could be terminated as soon as possible, citing people familiar with the matter.

FTX licensed April of this year. This license allows cryptocurrency exchanges to operate across Europe. FTX was licensed by the Cyprus Securities and Exchange Commission.

To be licensed, FTX had to meet the criteria outlined in the European Union’s MiFID II Directive. Bloomberg added that criteria include segregation and protection of client funds, operational transparency and adequacy of capital.

FTX’s troubles began earlier this week after a balance sheet related to sister exchange Alameda Research was leaked. According to the balance sheet, FTX and Alameda Research had significant debt and holdings of FTT, the FTX exchange’s native token.

Rival crypto exchange Binance is now threatening to sell its holdings of FTT, increasing pressure on FTX and Alameda Research.

FTX began facing liquidity problems within hours of the leak, with reports that FTX used customer funds to fund Alameda Research, a hedge fund owned by Sam Bankman-Fried. rice field.

Binance bought FTX and agreed to take responsibility for it, but canceled the deal after reviewing FTX’s financials.

By the end of the week, FTX announced it had Filed for Chapter 11 bankruptcy, and affiliates such as FTX US and Alameda Research. His Bankman-Fried, CEO, also stepped down and John J. Ray III, a Chicago-based attorney, was appointed head of the company.

FTX is now seeking bankruptcy protection in Delaware. Cryptocurrency exchanges are currently under investigation by bodies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

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