Former FTX CEO, Sam Bankman-Fried, has been summoned to a hearing on February 2 by the Texas securities regulator as part of an investigation to determine whether he and FTX US have violated Texas securities laws.
In a notice of hearing signed by Texas State Securities Board (SSB) Chief Enforcement Officer Joe Rotunda and delivered to Bankman Fried on November 29, the regulator alleges that FTX US offered unregistered securities to Texans through its “EARN” accounts.
The investigation was first announced on October 14, before the dramatic collapse and bankruptcy of FTX’s global operations.. The regulator then announced that it was investigating FTX Trading and FTX US and their directors, including Sam Bankman-Fried, for offering unregistered securities through their performance products.
On November 18, Rotunda used Twitter to appeal to the public for former FTX customers in Texas to contact him.
If you’re a client if @FTX_Official and you live in Texas, please reach out to me. We want to hear your story. My Texas State Securities Board email address is [email protected].
— Joe Rotunda (@joe_rotunda) November 18, 2022
If you are a @FTX_Official customer and live in Texas, please contact me. We want to hear your story. My email address for the State of Texas Securities Board is [email protected].
In the last notification, the SSB alleged that Sam Bankman-Fried breached a section of the Securities Act during his role as the then-CEO of FTX.
“The Defendant [Sam Bankman-Fried] violated section 4003.001 of the Securities Act by offering and selling securities in Texas that were not registered or permitted for sale in Texas,” said Rotunda, adding that it also did not register as a distributor or agent in Texas.
The regulator said it hoped the hearing would lead to a cease and desist order to prevent FTX from “engaging in fraud in connection with the offer or sale of securities in Texas.”
He also “begged” that the judge order Bankman-Fried to return the money to Texan clients who had invested in his “unregistered EARN accounts.”
The regulator also wants to consider imposing an “administrative fine” on Bankman-Fried if it has derived any financial benefit from securities law violations. This amount would not exceed $20,000 per violation, but could be as high as $250,000 for each “illegal or fraudulent act” committed against Texans age 65 and older.
Rotunda said that the hearing will begin at 9 a.m. local time on February 2, 2023, and that Bankman-Fried can attend the hearing using Zoom.
It is understood that Bankman-Fried It is currently in the Bahamas.
In a recently published interview between cryptocurrency blogger Tiffany Fong and Bankman-Fried, the former CEO of FTX expressed his remorse over his management of FTX and the bankruptcy filing.
“You don’t get into the situation we got ourselves into if, for example, you make all the right decisions,” he said. in the interview published on November 16.
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