Exclusive-How FTX bought its way to become the ‘most regulated’ crypto exchange
Before it failed this month, FTX distinguished itself from a number of competitors in the highly unregulated crypto business by claiming to be the "most regulated" exchange on the planet and welcoming increased government scrutiny.

The strategy and tactics behind founder Sam Bankman-Fried's regulatory agenda are now revealed in company documents obtained by Reuters, including the previously unreported terms of a deal announced earlier this year with IEX Group, the American stock trading platform mentioned in Michael Lewis's book "Flash Boys" about quick, computerized trading.
A document dated June 7 states that as part of the agreement, Bankman-Fried acquired a 10% share in IEX with the option to acquire the entire company in the next 2.5 years. The 30-year-old CEO had the chance to advocate for crypto regulation before the U.S. Securities and Exchange Commission thanks to the relationship.
One of FTX's larger objectives was to swiftly create a friendly regulatory framework for itself by purchasing stakes in businesses that already had licenses from authorities, skipping the frequently drawn-out approval process. This deal and others mentioned in the documents, which include business updates, meeting minutes, and strategy papers, shed light on this goal.
According to FTX records from a meeting on September 19 that Reuters has access to, the company spent about $2 billion on "acquisitions for regulatory purposes." For instance, it acquired LedgerX LLC, a futures exchange, last year, granting it three Commodity Futures Trading Commission licenses simultaneously. As a licensed exchange, FTX now has access to the U.S. commodities derivatives markets. Securities known as derivatives get their value from another asset.
The documents reveal that FTX also considered its regulatory standing as a means of securing fresh funding from significant investors. It touted its licenses as a crucial advantage over competitors in the documents defending its request for hundreds of millions of dollars in funding. It claimed that the "regulatory moats" it had built would keep competitors at bay and grant it access to lucrative new alliances and markets that were out of reach for unregulated organizations.
In a document distributed to investors in June, the exchange boasted, "FTX has the cleanest brand in crypto."
When contacted for comment regarding concerns over FTX's regulatory approach, Bankman-Fried remained silent. FTX declined to comment when contacted.
For this report, an SEC spokeswoman declined to comment. Also declining to respond was the CFTC.
In a text conversation with Vox this week, Bankman-Fried changed her mind regarding regulatory issues. He responded in a series of messages when asked if his earlier approval of rules was "just PR," saying: "yes, just PR... I hate regulators. They worsen everything... They offer no protection to clients.
A representative for IEX declined to clarify specifics of the deal with FTX, other than to stress that FTX cannot sell its "small minority position" in IEX to a third party without its permission. The spokeswoman stated, "We are currently assessing our legal alternatives with regard to the past transaction.
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