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This week, thanks to emails obtained by The Guardian, we learned that Australian regulators had FTX under investigation before the exchange collapsed.

Australian regulators investigated FTX before collapse

It appears that regulators were taken aback when FTX announced in March last year that it planned to launch (officially) in Australia, with users soon able to get up to 20 times leverage.

It's important to note that FTX was operating in Australia before this 'official launch.' When Australian regulators pulled the application information for FTX Australia's Australian Financial Services License (AFSL) they learned it obtained the license by acquiring a company called IFS Markets. In turn, IFS Markets obtained the license by acquiring a company called Forex Financial Services.

This led Australian regulators to send several information requests to FTX Australia in order to gain more information. It seems that FTX was still under investigation at the time of its collapse.

It's interesting to see how some of FTX's activities in Australia may connect to other ongoing Australian regulator actions.

Alameda bought this obscure OTC desk to handle FTX banking

Fred Schebesta and Frank Restuccia started a company called Finder where people could compare various financial products, including crypto projects. They also started an over-the-counter (OTC) trading desk called HiveEx in 2018. Shortly after, Schebesta's ambitions grew and he purchased stake in Goldfields Money, an Australian bank. He claimed he was going to be the one to start Australia's first crypto bank.

After this, their little OTC desk begins advertising the ability to get other crypto companies banking – even if those companies were previously rejected from 15-20 other banks.

This appears to have been a relatively important part of the operation, as they even had an executive in charge of 'Bank Account Brokering' – a title I have struggled to find a reasonable definition for.

In August of 2020, Alameda Research purchased this OTC desk for AU$300,000 and immediately made Sam Bankman-Fried director. This may end up being an inconvenient fact for him as he insists he had no control of Alameda Research and also was definitely not commingling.

FTX then announced that the entity (which was purchased by Alameda Research) could be used to deposit or withdraw from FTX. Even here, despite SBF's confidence that commingling didn't occur, there's confusion. Notice the tweet says FTX, but the image attached to it says Alameda.

Further of note, Goldfields Money was one of the banking counterparties listed in the FTX bankruptcy.

In November of 2021, Finder, the other company run by Schebesta and Restuccia, decided to join many other ill-fated companies and launch an 'Earn' product. Customers would deposit money and then Finder would do some ill-specified crypto-related activities and give them back more money than they deposited.

It's unclear what hedge funds or exchanges they partnered with for this service.

Finder Wallet sued by Australian regulators for unlicensed Earn product

After FTX went bankrupt, Finder decided to sunset its Earn product, seemingly after getting a warning from Australian regulators. A few days later, Schebesta stepped down as CEO and a few days after that, Australian regulators sued the company for handing out illegal financial advice and offering this product without the appropriate licensure.

That feels like a reasonable end to the story. And it would be if FTX hadn't recently filed its creditor matrix, which counterintuitively lists entities that may not be creditors. It's intentionally broad to ensure that people who may be creditors get notified. This document ended up containing HiveEx, Finder, Goldfields Money, and the Australian Attorney General's Office.

Now, obviously, Australian regulators didn't intervene in time to have any impact on the collapse, but it does seem that they were working on figuring out what FTX was doing down under.

That appears to be that, but there's one little detail that's circumstantial, non-conclusive, and bothering me. The Sydney Morning Herald reported that Australian authorities disrupted a $10 billion Chinese-Australian money laundering operation.

The seizure included crypto, and they're currently investigating how crypto exchanges were used as part of their laundering strategy. They used a shadow banking system where funds were extended on 'credit' in Australia and then 'collected' overseas to ensure that funds didn't cross international borders. Specifically, they seem to have needed both casinos and crypto businesses to pull this off.

This operation seems to be linked to triad activity out of China. There's no clear connection to any specific crypto company and it's been a long-term investigation.

FTX used former Wirecard partner to process Chinese payments

Now, let's pause for a second and be exceedingly clear that there's no evidence that FTX, Alameda Research, or HiveEx were in any way connected to this operation or this investigation.

However, when reading about the operations of this money laundering syndicate, I couldn't avoid thinking about the Financial Times report that FTX used Hong Kong-based Genesis Block. The crypto retail service company reportedly controlled dozens of different bank accounts and used those to help move money. I wonder if they needed someone in charge of 'Bank Account Brokering' for that too.

These weird OTC desks are dotted around the periphery of Sam Bankman-Fried's empire that seem like onramps and offramps for money that the banking system has been hesitant to accept.

In other news:

Bitfinex and unknown sources deposit $13M in Alameda Research crypto wallet

Alameda Research wallets received deposits of ether and tether from Bitfinex and another unknown source, apparently related to returning funds to the liquidators.

What is Miniscript and how does it help Bitcoin?

Ledger adopting Miniscript may help improve self-custodial options for Bitcoin users.

Social token Rally abruptly shuts, user crypto stranded on-chain

Rally Token appears to have done a rugpull, abandoning its entire sidechain and leaving all the assets stranded. It raised $57 million in its last round.

Crypto tax firm CoinTracker cuts 20% of staff a year after $100M round

CoinTracker laid off 20% of staff after raising $100 million a year ago. In June, it said: "We've been saddened by the continued news of layoffs across crypto, tech, and beyond. Many of our friends, former colleagues, and partners have been affected. We invite anyone looking for work to consider applying to CoinTracker."

FTX clawback efforts accelerate with $450M lawsuit against Voyager

FTX/Alameda has filed a lawsuit against the platform it once sought to acquire in order to claw back loan payments.

Independent examiner finds Celsius ticks every Ponzi box

The independent examiner finds that Celsius sure looks like every other Ponzi.

Did Taproot ruin Bitcoin with NFT inscriptions of monkey jpegs?

Bitcoiners found a new way to do colored coins, but instead of OP_RETURN and links to offchain data, they abuse Taproot and SegWit to store the image onchain, with a discounted rate.