The Texas financial regulator has called former FTX CEO Sam Bankman-Fried for a hearing to determine whether FTX sold unregistered securities to its clients.
The Texas State Securities Board (TSSB) has charged FTX US with violating state security laws, and has subpoenaed Bankman-Fried to appear before an administrative hearing on Feb. 2. The notice indicated that the former crypto billionaire could appear via Zoom.
The goal of the hearing is to determine whether the regulator will issue a cease and desist order against FTX and its affiliates, ordering them to partially cease operations in Texas. Furthermore, the hearing will determine whether Bankman-Fried will be required to refund customers money and pay fines for violating Texas law.
The Texas Securities Board has listed several entities potentially involved in the sale of unregulated securities. These companies include FTX US, FTX Capital Markets, LLC, and FTX US Derivatives LLC.
The TSSB also noted that FTX Capital Markets, LLC, is registered as a securities dealer with the regulator. The regulator additionally mentioned that Texas can buy and sell publicly traded stocks and cryptocurrencies through several FTX affiliates.
Voyager Digital Investigation
The Texas State Securities Board has been investigating FTX US since at least October. That investigation became public when TSSB Enforcement Director Joe Rotunda released a Voyager Digital bankruptcy filing, saying that FTX US may have been violating state security laws. The regulator objected to FTX US’s sale of revenue products to Texas.
Sam Bankman-Fried’s notice mentions FTX’s deal with Voyager Digital, a bankrupt crypto lending company. TSSB issued a notice of hearing to Voyager Digital in April, alleging that the company’s EARN program constitutes an unregulated securities offering in Texas.
Bankman-Fried was apparently not deterred by the investigation, and chose to sign a deal with the company anyway.
Texas Regulator investigates Tom Brady and Steve Curry
TSSB has also launched an investigation into high-profile celebrities who have promoted FTX US. Among them are Tampa Bay Buccaneers quarterback Tom Brady and Steve Curry of the Golden State Warriors.
The two sports stars are just some of the celebrities under investigation for possible violations of state security laws.
on the flip side
- The investigation is unlikely to yield any immediate effects, as SBF is no longer responsible for FTX US.
Why should you bother
The move could be a sign that regulators are closing in on Sam Bankman-Fried. The renewed pressure may yield additional information about the FTX breakdown.
Read more about the FTX crash:
Latest FTX: SBF’s Fallen Crypto Empire Holds $1.24 Billion in Cash Reserves
Read about other investigations into FTX:
Turkish authorities investigate SBF and seize ‘suspicious’ FTX assets