Welcome to the Hughes Hubbard Anticorruption and Internal investigation Practice Group’s podcast, where members of the Hughes Hubbard Anticorruption and Internal Investigation Practices Group and I delve into the legal issues surrounding white-collar and other investigations, both domestically and internationally. In this episode, I visit with Amina Hassan, a litigator in the Hughes Hubbard litigation department, and discuss the FTX scandal, one of the most unbelievable stories in recent fraud See more +

Welcome to the Hughes Hubbard Anticorruption and Internal investigation Practice Group’s podcast, where members of the Hughes Hubbard Anticorruption and Internal Investigation Practices Group and I delve into the legal issues surrounding white-collar and other investigations, both domestically and internationally. In this episode, I visit with Amina Hassan, a litigator in the Hughes Hubbard litigation department, and discuss the FTX scandal, one of the most unbelievable stories in recent fraud history.

Amina has been with the firm since graduating from law school and has a wealth of experience in the crypto world, handling cross-action security litigation and helping clients navigate the uncertain regulatory and enforcement landscape in the US.

Key ideas you’ll hear in this episode:

1. FTX was the second-largest crypto exchange. It offered a crypto derivatives exchange for trading futures on a margin, but not available to US customers.

2. Sam Bankman-Fried was the founder of FTX. Alameda Research was a sister company and one of FTX’s biggest customers and borrowers. Money seemed to flow between and through the entities unusually, leading to failure and a lack of control.

3. The collapse of FTX has brought scrutiny to the SEC’s role in regulating crypto. However, the SEC’s position is that they already have a regulatory structure and will continue to enforce it.

4. The SEC has been the most active regulatory agency for crypto enforcement, but other agencies, such as the CFTC, FTC, and CFPB, will likely become more active in enforcing regulations in the crypto space.

5. Sophisticated investors such as pension funds, hedge funds, and large wealth management funds invested nearly a billion dollars in FTX despite having fewer financial statements than the average individual.

6. The FTX scandal is a wake-up call for institutional investors to improve their due diligence in the crypto space. This should include understanding the technology and asking questions like how wallets are kept and stored.

7. The aftermath of the collapse of FTX may mean challenges for its competitors, such as Coinbase or even Bitcoin.

8. The SEC has taken an enforcement-centric approach towards crypto and has yet to indicate any plans for rulemaking in 2023.

9. There have been calls for more clarity in existing regulations for the crypto space and for possible specialized agencies like FINRA to be created for the crypto industry. See less -