FTX’s European licence could be suspended

Cryptocurrency exchange FTX is at risk of losing its European license after the company filed for bankruptcy a few hours ago.

FTX’s European Union license in Cyprus could be suspended as the crypto exchange comes under pressure.

According to Bloomberg Report, FTX Europe may have its European Union investment firm license suspended. Citing people familiar, Bloomberg said the license could be suspended as soon as possible.

FTX received the license in April of this year. The license allows the cryptocurrency exchange to operate across Europe. FTX has obtained the license from the Cyprus Securities and Exchange Commission.

To receive the license, FTX had to meet the standards outlined in the European Union’s MiFID II directive. Bloomberg added that the standards include segregation and protection of customer funds, transparency of operations, and capital adequacy.

FTX’s troubles began earlier this week after a report leaked relating to its sister trading firm Alameda Research. According to the balance sheet, FTX and Alameda Research had significant liabilities and holdings of FTT, the native token of the FTX exchange.

Rival crypto exchange Binance has now threatened to sell its FTT holdings, leading to increased pressure on FTX and Alameda Research.

FTX began facing liquidity issues hours after the leak, with reports indicating that FTX used client funds to fund Alameda Research, the hedge fund owned by Sam Bankman-Fried.

Binance agreed to acquire FTX and assume its debts but later canceled the deal after reviewing FTX’s finances.

At the end of the week, FTX announced that it had filed for chapter 11 bankruptcy, alongside its subsidiaries, including FTX US and Alameda Research. CEO Bankman-Fried also stepped down, and Chicago-based attorney John J. Ray III was named to head the company.

FTX is currently seeking bankruptcy protection in Delaware. The cryptocurrency exchange is currently under investigation by agencies including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).