Cyprus Extends FTX Europe’s Suspension for Fourth Time: A Prolonged Effort to Return Client Funds
In the sprawling tale of cryptocurrency exchanges grappling with regulation, one particularly significant chapter revolves around FTX Europe, the EU-regulated arm of FTX. The collapse of FTX sent shockwaves through the industry, and for the fourth time, Cyprus’ financial regulator, the Cyprus Securities and Exchange Commission (CySEC), has extended its suspension of FTX Europe’s operations. This recent extension carries considerable implications, especially for the many clients still hoping to extract their funds from the platform nearly two years after FTX collapsed on the world stage.
CySEC’s notice, issued on November 5th, 2023, stretches the suspension until May 30, 2025. This extension prohibits FTX EU from performing any core business activities like offering services, welcoming new clients, or running advertising campaigns. Yet, the suspension notably leaves a vital lifeline intact: customers are still able to complete transactions, particularly in terms of requesting and receiving their funds. Thus, while the platform won’t be dealing in its previous capacity with derivatives or other investments, the regulatory strategy has left the door open for FTX Europe to fulfill its most urgent obligation—to get clients their money back.
To place this fourth extension into perspective, it is important to revisit CySEC’s original suspension order, which dates back to November 11, 2022—a pivotal moment when FTX filed for bankruptcy protection in the United States under Chapter 11. The timing was anything but coincidental. CySEC acted swiftly, echoing global concerns about the safety of client assets and trust in the management, who at that point were facing intense scrutiny.
Though FTX Europe had only been operational for a brief eight months before its suspension, its rapid expansion had placed it at a significant juncture of the global trading ecosystem. FTX had quickly garnered attention as a major player in multi-asset derivatives trading. However, the abrupt halt to its operations in Europe reflected a broader collapse, one that was exacerbated by rampant rumors of mismanagement and even breaches of security. Around the same time the suspension was given, alarming reports circulated about a hack that drained approximately $600 million in cryptocurrency from FTX’s international and U.S.-linked wallets—a staggering blow from which the company never truly recovered.
Adding another layer to the story, FTX Europe, which was originally a startup called Digital Assets AG based in Switzerland, had been acquired by FTX in a deal priced at $323 million in 2021. What seemed like a strategic move at the time—expanding FTX’s footprint into the European market—would later be viewed as a costly misstep. Following FTX’s rapid downfall, the company’s restructuring team estimated that this acquisition had likely been grossly overpriced, calling it a “massive overpayment.” This led to complicated counter-litigation with the original owners, who contested the restructuring team’s claims.
Despite the legal back and forth, FTX eventually settled the matter earlier in 2023. In February, reports confirmed that FTX Europe was sold back to its original founders for a notably lower figure of $32.7 million—significantly less than what FTX had initially spent for the acquisition. This settlement marked a crucial turning point in FTX’s broader restructuring efforts, as it attempted to recoup losses and address mounting customer grievances.
However, even with control of FTX Europe reverting to its initial owners, the division itself remains far from active. The FTX Europe website, which formerly hosted myriad trading opportunities, no longer facilitates any transactional or trading functions. Instead, it now solely serves as an access point for former clients to check their balances and submit withdrawal requests, which is arguably a modest legacy for a company once seen as a rising star in the competitive exchange market.
For those FTX Europe clients who either cannot or have yet to withdraw their funds, there is some peace of mind provided through a protective measure outlined in the website’s FAQ section. It details that unclaimed balances will be placed into a “client segregated account.” This account will secure customer assets for an extended duration of six years, affording extra time for account holders to complete the withdrawal process even years down the line.
The ongoing extension of FTX Europe’s suspension by CySEC speaks to the broader, long-term consequences of the FTX debacle. The suspension’s indefinite yet purposeful stance—allowing for withdrawals while banning new business—reflects a regulatory approach aimed at balancing consumer protection with the winding down of a business model that had unraveled at alarming speed.
In summary, the Cyprus Securities and Exchange Commission’s decision to extend the suspension, now encompassing a period of over two years and counting, underscores the continued struggle to resolve the impacts of FTX’s collapse. For FTX Europe, which once promised to offer cutting-edge trading in derivatives and other assets, the future remains uncertain. Yet, the regulatory mechanisms in place are slowly enabling customers to disentangle from the platform and retrieve their funds. The saga, however, continues, and all eyes will be on what, if any, new developments come in the months leading up to May 2025.
