According to a report that was published by Barron’s on October 17, FTX CEO Sam Bankman-Fried and FTX US, the American subsidiary of the cryptocurrency behemoth, are the subjects of an investigation by the Texas State Securities Board. The news comes as little surprise to the cryptocurrency community, where rumblings of insider trading were first announced back in October.
According to a filing by enforcement director Joe Rotunda, there is a suspicion that FTX US is selling unregistered securities in the form of yield-bearing accounts inside the United States. Since the exchange is not registered, the Texas Department of Banking does not recognise it as either a money transmitter or a seller of payment instruments.
Joe Rotunda highlighted that the agency welcomes working with FTX to bring it into compliance. This indicates that the exchange would need to obtain registration to sell securities in the state or find exemptions to registration in order to meet the requirements. He added that this approach is drawing from a framework that Texas authorities have built as a result of their settlement in February with BlockFi for unregistered securities sales. In that settlement, the digital asset lender paid $100 million to settle with federal and state regulators.
In addition, it does not have a valid registration with the Texas State Securities Board to operate as a dealer in securities. The allegations are for securities fraud and for fraudulent inducement of new customers, among many other violations.
Despite the fact that the company asserts that it does not provide services of this kind, Rotunda said that he was able to open a yield-bearing account in the United States. A bankruptcy court, which is now monitoring the sale of Voyager Digital’s assets, was provided with the damaging claims.
In the past year, multiple crypto firms have had similar charges levied against them by the SEC, and the reason that these companies have been under attack is due to the potential for investors to be deceived about the nature of the services being offered by these companies.
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