Cyprus Extends FTX Europe Suspension Until May 2025 Amid Ongoing Review

Highlights:

• CySEC extends FTX Europe suspension to May 2025, keeping the platform under strict regulatory control.
• FTX Europe is restricted from new trades and clients while existing users can still withdraw their funds.
• Legal issues and financial losses mount for FTX as former executives face scrutiny and criminal charges.

Cyprus’s Securities and Exchange Commission (CySEC) has once again extended its suspension of FTX Europe’s operations. Announced yesterday, this latest extension adds another six months, pushing the suspension to May 30, 2025. The extension keeps FTX Europe under strict regulatory control. 

The platform cannot sign up new clients, offer new services, or engage in promotions until then. However, existing clients can withdraw their funds. The first suspension happened in November 2022, after FTX filed for bankruptcy in the United States.

📰UPDATE: CYPRUS FINANCIAL REGULATOR EXTENDS SUSPENSION OF FTX EUROPE FOR ANOTHER SIX MONTHS, CITING ONGOING INVESTIGATIONS

— BSCN Headlines (@BSCNheadlines) November 6, 2024

The move aims to protect customer interests while CySEC continues its review. Regulatory authorities remain concerned about FTX Europe’s management practices. CySEC’s initial intervention also stemmed from a large-scale hack that hit the platform. 

The hack drained approximately $600 million from FTX wallets in the U.S. The first suspension came as a result of this event and it raised questions about the platform’s security and their leadership. CySEC has since extended the suspension several times.

Restrictions on FTX Europe Operations

The restriction on the platform means that the company can not grow its user base which will affect the operational costs and profitability. The potential revenue channels from marketing and promotion are cut off. However, current users can still access their accounts through the Platforms website. All funds not withdrawn will be placed in a segregated account. The funds will be available for six years.

FTX Europe was initially operated by Digital Assets AG, a Swiss startup. In 2021, FTX purchased the company for $323 million, rebranding it as FTX Europe. Immediately following its acquisition, CySEC flagged issues with management suitability. FTX Europe was bought back by the original owners for $32.7 million in early 2024. 

Impact on FTX Europe Customers

FTX Europe’s extended suspension has major implications for customers. This is the fourth suspension since FTX collapsed in 2022. At the time of the collapse, the company had operated for only 8 months in the EU. The platform has advised its customers to withdraw funds as soon as possible to avoid further delays. 

The future of the platform remains unclear and many users remain concerned. Its ongoing suspension suggests that full operational restoration may not occur. FTX Europe’s website now serves only as a portal for balance checks and withdrawals. CySEC has shown no signs of lifting restrictions soon. 

Legal Issues and Financial Losses

FTX has filed a lawsuit against Ryan Salame, former co-CEO of FTX’s Bahamian subsidiary. Salame is alleged to have helped misappropriate customer assets alongside founder Sam Bankman-Fried. Salame profited from various ‘financial transfers,’ including millions in crypto, cash, and bonuses. FTX alleges that Salame used misappropriated money to purchase luxury goods, invest in real estate, and assist in the acquisition of $55 million in monetary assets.

Fallen FTX sues Ryan Salame for $98.8 million over alleged fraud pic.twitter.com/BKMQOGm9q6

— Blockchain Radar (@freedom198735) November 6, 2024

Multiple jurisdictions are currently pursuing legal proceedings in the FTX case. Salame is serving a prison sentence after pleading guilty to making illegal contributions. FTX is actively recovering assets linked to these claims, including real estate and funds located in Miami, Portugal, and Hong Kong.