All Things Investigations

FTX-What's the Current Status with Amina Hassan

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


Amina has been with the firm since graduating 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:

  • FTX was the second largest crypto exchange. It was a sprawling group of over 100 entities headquartered in the Bahamas. It offered a crypto derivatives exchange for trading futures on a margin, but not available to US customers.
  • Sam Bankman-Fried was the founder of FTX. Alameda Research was a sister company and one of FTX’s biggest customers, but also borrowers. Money seemed to flow between and through all of the entities in an unusual way which led to the failure and lack of control.
  • The collapse of FTX has brought scrutiny on the SEC's role in regulating crypto. However, the SEC's position is that they already have a regulatory structure in place and will continue to enforce it.
  • 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.
  • 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.
  • 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 the right questions, such as how wallets are kept and stored.
  • The aftermath of the collapse of FTX may mean challenges for its competitors, such as Coinbase or even Bitcoin.
  • The SEC has taken an enforcement-centric approach towards crypto and has not indicated any plans for rulemaking in 2023.
  • 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.


    • KEY QUOTE:

    "One of the key takeaways from the FTX scandal is really the complete failure and lack of controls." ~ Amina Hassan


    Resources

    Hughes Hubbard & Reed website 

    Amina Hassan on LinkedIn

    ...more
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    All Things InvestigationsBy Tom Fox
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