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Comment by ac29 | Hacker News Reader

> The interesting thing is that FTX had almost no retail customers in the US[1]

This is only true if you believe the massive amounts of customers in the Cayman Islands, Virgin Islands, etc were not just US persons' shell companies.

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Is it common for retail investors in the US to create shell companies in the Cayman Islands etc? Is that a service offered at low cost that everybody uses to get around so regulatory hurdle, like using a VPN to get around simple geofencing on streaming platforms?

It's very common for investment firms and other tax-dodging entities, very uncommon for the everyday wealthy person. Much of the privacy benefit to Caymen shell corps is readily available in Delaware or e.g. Montana, so only more exotic tax schemes require international companies.

> Much of the privacy benefit to Caymen shell corps is readily available in Delaware or e.g. Montana, so only more exotic tax schemes require international companies.

FTX.com was unavailable to US persons or companies, so being legally based in Delaware/Montana/etc wouldnt have helped.

It’s around $4-5k USD to set up a exempted company and get a bank account for said company in the Caymans, with annual costs being in the $2-3k USD range. Can be cheaper or more expensive, depending on the service provider. Not uncommon for more savvy investors.

Yes. Sub $10k pa for nominee management of companies. Used to have Mossack Fonseca as a customer.

Those wouldn't be retail customers in the US though, they'd be customers in the Cayman Islands...

They aren't "in the Cayman Islands" any more than a VPN user is in the country of their VPN server though. In this case, setting up a shell company in the Caribbean was a convenient way to get around US regulation (or taxes, or both).

FTX was transacting with a user in the Cayman's not the us.

It's pretty hard to feel bad for tax dodging fat cats getting bitten by a con man though.

Who cares if you feel bad for them? Who even asked? Crime isn't supposed to be legal when you victimize other unsympathetic criminals.

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