Cyprus’s securities regulator plans to extend the suspension of the licence of disgraced FTX EU and will meet to discuss the matter next week, a spokesperson said.
“CySEC is taking all the necessary actions to safeguard the interests of investors of FTX EU and is working closely with the administrator in the US under chapter 11,” the person said in a written comment to Reuters.
The Cypriot regulator suspended the licence of FTX EU on November 11, just before the cryptocurrency exchange imploded, seeking bankruptcy protection in the United States.
FTX EU had then been given a month to rectify what CySEC suspected were violations of conditions to safeguard client assets and the suitability of management.
Its former CEO, Sam Bankman-Fried, was charged by the US Securities and Exchange Commission on Tuesday with defrauding investors following his arrest by Bahamian authorities.
A magistrate judge in the Bahamas denied bail to FTX co-founder, citing heightened flight risk, and said he should be remanded to Bahamian custody until February 8, 2023.
His legal team is planning to fight any extradition order.
FTX announced in September that it had received approval to operate FTX EU as a Cyprus Investment Firm.
CySEC has said it was not licensed to engage in the direct trading of crypto assets.
The US Attorney’s Office for the Southern District of New York charged the disgraced crypto executive with eight criminal counts: conspiracy to commit wire fraud and securities fraud, individual charges of securities fraud and wire fraud, money laundering and conspiracy to avoid campaign finance regulations.
John J. Ray, the company’s new CEO, told US lawmakers the company had “no record-keeping whatsoever,” using bookkeeping software QuickBooks to track its multibillion-dollar portfolio.
“This is really just old-fashioned embezzlement. This is just taking money from customers and using it for your own purpose. Not sophisticated at all,” Ray told the House Financial Services Committee.
“Sophisticated, perhaps in the way they are hiding something, frankly, right in front of their eyes. This is just plain old embezzlement. Old school, old school.”
The company imploded and filed for Chapter 11 bankruptcy last month after reportedly transferring billions of dollars in FTX customer funds to Bankman-Fried’s hedge fund, Alameda Research.
