FTX Was Targeting Main Street

○ Before it collapsed, the crypto exchange saw novice small investors as its future

Early last year, cryptocurrency exchange FTX US was setting its sights on a vast pool of money: individual retirement accounts. “We have IRAs trading on FTX today, and are making a push to serve this segment,” Nate Clancy, FTX US’s vice president for business development, wrote in an email in March to a New Jersey-based investment adviser, a copy of which was seen by Bloomberg News.

The outreach, part of a multifaceted effort by the wider FTX Group to expand its base of everyday retail customers, casts light on the exchange’s sprawling ambitions in the months leading up to its implosion. It also gives a glimpse into how the damage might’ve been even worse had the plans been given longer to gestate.

FTX and former Chief Executive Officer Sam Bankman-Fried’s broader crypto empire collapsed in November. US authorities allege he fraudulently used customer money to prop up his trading firm, Alameda Research, leaving legions of clients high and dry when FTX went bankrupt. The charges center on the group’s global trading platform FTX.com, but FTX US—its smaller unit for US investors—was part of the bankruptcy.

Every young company prioritizes growth, and prosecutors haven’t publicly assigned any sinister motives to the retail push, which seemed like a logical enough way for FTX to capture market share. But the allegations against Bankman-Fried underscore the perils of luring unsophisticated savers into a loosely regulated industry pushing highly volatile and opaque instruments, with often scant customer protections.