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As the second anniversary of FTX’s dramatic collapse approaches, Cyprus’s financial watchdog, CySEC, has once again extended the operational suspension of FTX Europe.
Announced on November 5, this extension freezes FTX’s European arm from offering services or acquiring new clients until at least May 30, 2025. While it restricts new activity, FTX Europe is still permitted to manage transactions necessary for customer withdrawals, allowing users some access to their funds.
CySEC’s FTX Europe Freeze Background
This decision marks the fourth extension of FTX Europe’s suspension since CySEC first ordered the halt in November 2022, closely following FTX’s Chapter 11 bankruptcy in the U.S.
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At the time, FTX Europe, formerly known as Digital Assets AG, had only been functioning under EU regulation for eight months, primarily offering derivatives trading across multiple assets. However, CySEC’s swift action came as FTX’s U.S. troubles exposed potential issues with the management body’s suitability and concerns over safeguarding client funds.
Acquisition Dispute and Sale Back to Founders
FTX Europe was initially acquired by FTX in 2021 for $323 million, a substantial investment reflecting the now-defunct exchange’s ambitious expansion into Europe. However, following FTX’s collapse, restructuring efforts revealed a legal tussle over the acquisition’s steep valuation. FTX’s restructuring team, eager to recover funds, argued that the acquisition cost was an “overpayment,” leading to a dispute with the original owners.
In February, a resolution was reached, with FTX selling the European division back to its original owners for $32.7 million — a fraction of the acquisition price. The buyback allowed the founders to regain control of FTX Europe, yet the regulatory suspension remains firmly in place, a sign of the continuing caution around FTX’s legacy operations.
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Client Funds in Segregated Accounts for Six Years
With FTX Europe’s services halted indefinitely, the firm’s website currently provides a limited interface where clients can view balances and request withdrawals. CySEC has further stipulated that any unclaimed client funds will be transferred to a “client segregated account,” where they will be held for up to six years, protecting them from further fallout.
The ongoing suspension and strict fund management policies signal that, while FTX Europe’s original owners have regained control, CySEC’s approach is one of intense scrutiny.
