A loophole allowed FTX to obtain its Australian licence without any thorough checks

Australian Securities and Investments Commission (ASIC) chairman Joseph Longo is advocating for the closure of a regulatory gap that allowed FTX to obtain an Australian Financial Services License (AFSL) in the nation without undergoing the complete range of checks.

The Australian Financial Review reported on Dec. 5 that Longo made the remarks on Monday local time when addressing a joint parliamentary committee on businesses and financial services.

The recent collapse of FTX and Alameda Research, which was orchestrated by the company's unstable founder Sam Bankman-Fried, was obviously a major subject the committee examined.

When questioned about how and why the regulator allowed FTX to obtain an AFSL when it was under its watch, Longo defended his regulatory organisation, claiming that a legal loophole precluded ASIC from intervening or carrying out the necessary inspections.

Longo claimed that this flaw gives ASIC no legal justification for looking into corporations the same way it looks into prospective licensees.

FTX "purchased [its AFSL] from an already-licensed party. It is typical to act in this way under the law, according to Longo, who also noted that although we were informed of the situation, trading someone else's licence is a simple process.

Longo continued by saying that ASIC had directly asked the previous administration of Scott Morrison to close this regulatory breach, but that nothing came of it.

Currently, ASIC can only fully assess a business to ascertain if it has sufficient compliance and capital controls in place when it applies for a new AFSL.

Sam Bankman-Fried has launched a media tour in an effort to shed light on what went wrong after the crypto exchange failed. In his first-ever audio interview, he admitted that his legal counsel had forewarned him against sharing his explanations of what occurred prior to the collapse on Twitter.

Indeed, across the media tours, Bankman-Fried has maintained his innocence, denying any wrongdoing and stating that the collapse caught him by surprise.

In addition to media tours, SBF has participated in Twitter Spaces. For instance, in a recent appearance, he was tasked to explain his initial call requesting $4 billion to help the exchange avoid bankruptcy in which he gave a vague answer.