Bloomberg News has seen an email that suggests FTX US was planning to offer individual retirement accounts to American consumers.
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Two months on from FTX's shocking and dramatic implosion, damning allegations surrounding the misuse of customer funds have emerged — and investigators are "working around the clock" to figure out where missing billions have gone.
And according to a new report, the fallout from the collapse of the world's second-largest exchange had the potential to be much, much worse.
Bloomberg News has seen an email that suggests FTX US was planning to offer individual retirement accounts to American consumers.
Had such ambitions been realized, there would have been an acute danger of substantial pension pots being wiped out overnight — meaning hard-working savers could have seen their dreams of retirement disappear before their eyes.
Swan Bitcoin's chief executive Cory Klippsten, a long-time critic of FTX, told the news outlet that it's a good thing that Sam Bankman-Fried's empire went bust when it did — as it could have gotten much bigger in the months and years ahead. He added:
"It's quite clear that FTX relied on continuous flows of new capital entering the platform, much like many other financial schemes, and marketing to retail was the most expedient way to attract those flows."
Of course, it's entirely possible that aspiring retirees already had crypto stored on FTX — funds that can no longer be accessed. The exchange's customers may only get a fraction of their savings back, and the road to recovery could take several years.
Crypto Pensions Raise Alarm Bells
During the dying embers of the bull market, there was growing enthusiasm to help consumers allocate part of their retirement funds to Bitcoin.
Fidelity Investments announced that it was giving employers the ability to include Bitcoin as an offering in 401(k) retirement plans, meaning workers would be able to allocate up to 20% of their portfolio to the world's biggest cryptocurrency.
This was a significant development because Fidelity is America's largest retirement savings provider — and in its eyes, "this technology and digital assets will represent a large part of the financial industry's future."
Even before FTX's bankruptcy, U.S. politicians had raised "grave concerns" about allowing consumers to save for their retirement using something so volatile.
Last November, three Democratic senators had urged Fidelity to perform a U-turn — arguing that pension investments could be driven by "consistent contributions and steady returns over time."
Dick Durbin, Elizabeth Warren and Tina Smith went on to argue that many potential investors "are unaware of the potential risks and financial dangers posed by digital assets like Bitcoin" — and alleged that Fidelity itself was well aware of this by capping maximum allocations at 20%.
