AUSTRAC Cracks Down on Inactive Crypto Exchanges to Combat Fraud

Australia’s financial regulator, the Australian Transaction Reports and Analysis Centre (AUSTRAC), has announced a crackdown on inactive cryptocurrency exchanges. The agency revealed that it will remove registrations from exchanges that have ceased trading but remain on their official lists. This move is part of a broader effort to clean up the crypto industry and protect consumers from potential fraud and illegal activities.

AUSTRAC has identified a concerning trend among the 427 registered cryptocurrency exchanges in Australia. Many of these exchanges are largely abandoned but still appear active on the register. The agency’s Chief Executive Officer, Brendan Thomas, issued a stern warning to these dormant operations, stating, “We’re warning these businesses: use it or lose it.” The concern is that criminals could purchase these idle businesses and exploit their current registrations for illicit purposes.

Under existing regulations, any entity that exchanges money for cryptocurrency, including ATM operators, must be registered with AUSTRAC. The agency monitors these enterprises to prevent money laundering, terrorist financing, and tax evasion. AUSTRAC has already canceled the registrations of ten companies in the past five years, with the most recent cancellation being FTX Express in June 2024. This action underscores AUSTRAC’s authority to remove companies from their register when there is reasonable suspicion that they no longer operate or provide crypto services.

To further safeguard consumers, AUSTRAC plans to release an official list of registered exchanges. This list will help Australians verify the legitimacy of crypto services before investing their money. Thomas emphasized that the public should feel confident in identifying legitimate cryptocurrency providers that are registered and subject to regulatory oversight. “We are driving criminals out of this industry,” he stated. The list aims to enhance trust in the crypto sector by making it easier to identify properly registered businesses.

AUSTRAC’s crackdown on ghost exchanges is part of a wider enforcement drive. In February, the regulator took action against over a dozen remittance providers and exchanges, with around 50 other businesses under investigation for potential rule breaches. Six providers were denied renewal of registration due to major personnel being convicted, charged, or prosecuted for serious offenses. This purge comes as Australia continues to develop broader crypto regulations, with the governing Labor Party initiating discussions with industry specialists on new regulations in August 2022. In March this year, the government proposed regulating exchanges under current financial legislation. These regulatory moves are gaining importance ahead of a federal election set for May 3, highlighting how digital currency regulation has become a key political priority in Australia.