About 10 days ago, the second largest cryptocurrency exchange at that time, Forex, went bankrupt after massive customer failures. However, before it got there, it managed to become an exception in an industry with a very bad reputation due to lack of regulation. In short, it looked like the “most regulated” stock exchange. cryptocurrencies on the planet and boldly called on the authorities to conduct a thorough investigation.

After its collapse and while its former managing director, Sam Bankman Freed, being interrogated by US and Bahamas authorities, documents emerge revealing his tactics and maneuvers. Among them is an agreement he signed a few months ago with IEX, a platform for trading US stocks via computer, without disclosing its terms. According to an exclusive Reuters report, the agreement stipulated that Bankman Fried would buy a 10% stake in IEX with full acquisition rights over the next two and a half years. Through this “collaboration”, the thirty-year-old businessman gained access to the IEX regulator, which is none other than the US Securities and Exchange Commission. Thus, he could exert behind-the-scenes pressure to regulate the industry.

Both this agreement and others mentioned in the accompanying documents with minutes of meetings and meetings with companies and much more define one of the goals of FTX: to form a friendly regulatory framework for itself by buying shares in companies that already had the appropriate licenses from the authorities. , bypassing the often time-consuming approval procedures. As such, FTX spent about $2 billion on “regulatory acquisitions,” according to documents from the cryptocurrency exchange obtained by Reuters. Last year, for example, it acquired the LedgerX LLC futures exchange, through which it obtained three licenses from the Commodity Futures Regulatory Commission. These licenses gave it access to the US commodity derivatives markets, where it has now emerged as a regulated exchange.

FTX spent about $2 billion on “regulatory acquisitions” to appear “clean”.

The documents show, after all, that he viewed the status of a controlled and regulated business as a means to attract new capital from investors. To raise the multi-hundred million dollar funds he was looking for, he presented his licenses as a strategic competitive advantage over other cryptocurrency exchanges. Thus, it appears from the documents that FTX believed that through these regulatory maneuvers, it was hindering its competitors by gaining access to lucrative new markets and partnerships that are not available to unregulated market participants. In a paper presented to investors in June, Bankman Fried said that “FTX is the cleanest company in the crypto space.” Speaking this week to cryptocurrency site Vox, Bankman Fried acknowledged that all of his regulatory and regulatory shenanigans were “just PR” and added that “regulators make things worse and never protect customers.”

As has been revealed over the past few days, FTX has been betting big, risking their clients’ money. Indeed, the four lawyers working on the matter point to the appalling lack of regulation in the cryptocurrency industry, as evidenced precisely by the fact that Bankman Fried systematically “flirted” with regulators while still betting clients’ money and making a profit. big risks. As Aitan Gelman, legal adviser at Zuckerman Spaeder, points out, “it’s a problem with the regulatory system that it has lost a lot of time and has been slow to adapt to the emergence of cryptocurrencies.”