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FTX has spent millions to promote itself as the “most regulated exchange”: report

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Key facts:
  • The cryptocurrency exchange spent about $2 billion on “regulatory takeovers.”

  • Former FTX CEO courted regulators and no one noticed that he used customer funds.

Documents from cryptocurrency exchange FTX reveal the tactics by which its founder San Bankman Fried (SBF) turned it into the “most regulated exchange on the planet,” as it self-promoted itself, without being fully so. Its regulatory status was key because it used it as a means of attracting new capital from large investors, Reuters reported in a report.

FTX spent some 2 billion on “acquisitions for regulatory purposes.” and as part of this, last year it purchased the futures exchange LedgerX LLC. In doing so, it obtained three licenses from the Commodity Futures Trading Commission in one fell swoop.

With these licenses in hand, SBF rebranded LedgerX LLC to become FTX US Derivatives, thereby gaining access to the markets as a regulated exchange. US commodity derivatives markets.

In doing so, it not only gained a competitive advantage over its rivals but also FTX gained access to more profitable markets. and gained more visibility in reaching out to new partnerships, according to the association report Of the media mentioned above.

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In fact, FTX US Derivatives is one of the few Bankman Fried-related properties that is not part of its bankruptcy proceedings. In fact, the company is still in business today, although it appears to have reverted to using the LedgerX brand, as it is redirected when one attempts to access its website website.

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Similarly, Bankman Fried purchased a 10 percent stake in the IEX exchange with an option to fully acquire it in the next two and a half years. Meanwhile, the partnership has given SBF the opportunity to lobby regulators to allow it to introduce a new product into the derivatives market, as noted by CFTC Chairman Rostin Behnam to CNBC.

These and other transactions reveal that in addition to operating in the cryptocurrency market, Bankman Fried has also made extensive strategy for FTX to have a congenial regulatory framework. To that end, it has acquired stakes in companies already approved by authorities, with the aim of shortening the often lengthy approval process through regulatory channels, Reuters reports.

Sam Bankman.
In a recent discussion Sam Bankman stated that only certain parts of the cryptocurrency industry should be regulated. Source: YouTube/Bankless shows.

FTX and its licenses: a marketing strategy?

In a document titled “FTX Roadmap 2022,” the cryptocurrency exchange’s team noted that the first step in achieving its goals is critical to “obtain as many licenses as possible.”

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Reference Binance countries

Even then FTX was the third exchange cryptocurrency exchange in the world. However, his team sought to build a financial platform where users could trade stocks and tokens, transfer money, and conduct banking transactions.

“In part, this is to make sure we are regulated and compliant; in part, this is so we can expand our product offerings,” reads a document viewed by Reuters that defines FTX’s need to acquire licenses. But instead of applying for them, which can take years and sometimes embarrassing questions, Bankman Fried decided to acquire them, the report adds.

On the other hand, a complex web has been woven behind the FTX cryptocurrency exchange. social network involving politicians and regulators, which would allow his team to operate irregularly without raising suspicions that something was wrong, as he himself had done. reports CryptoNews recently.

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Signs that something was wrong at the FTX abounded, but most preferred to turn a blind eye. Bankman Fried planned to run the exchange with little oversight, so stakeholders should “support and observe.” His proposal to investors was a “take it or leave it” offer, as in review The New York Times.

Now investors are also under scrutiny for allowing Bankman Fried to have so little oversight. On November 11, FTX and 130 subsidiaries were filed for bankruptcy and have become the most dramatic example in recent history of what happens when so-called visionary founders get a lot of money with few strings attached.

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