The Texas State Securities Board (SSB) and the Texas Department of Banking (DOB) filed a supplemental statement on October 14 in the Voyager Digital case, stating that the SSB is investigating FTX Trading, FTX US and its directors, including co-founder and CEO Sam Bankman-Fried, for allegedly offering securities not registered in the United States. FTX US won the auction of Voyager Digital’s remaining assets on September 26.
The supplemental statement from Texas regulators is attached to an objection to the sale of Voyager Digital’s assets to FTX filed by the Texas Attorney General’s office also on October 14. In that objection, the state alleges that Voyager Digital and FTX fail to comply with Texas law and “the proposed sale, or the order approving the sale, attempts to limit the Debtors’ liability for the unlawful conduct […] for which state regulatory fines and penalties may apply. Specifically, according to the objection, Voyager Digital made money transfers without a license because it was not registered as a securities dealer in Texas.
The director of the enforcement division of the SSB, Joseph Rotunda stated that he was able to download the FTX trading app on his smartphone and create a performance account using his own name and Austin, TX address. That app is linked to FTX Trading, which does not do business in the United States. However, Rotunda stated:
“The FTX Trading app now shows that I am gaining yield on ETH. Yield is valued at 8 percent APR. Based on my yield gain and an ongoing investigation by the Securities Board Enforcement Division of the State of Texas, the performance schedule appears to be an investment contract.”
Rotunda concluded: “FTX US should not be permitted to purchase the debtor’s assets unless or until the Securities Commissioner has an opportunity to determine whether FTX US complies with the law.”
Voyager Digital filed for bankruptcy in July. His case is pending in the Bankruptcy Court for the Southern District of New York. FTX Co-Founder and CTO Gary Wang and FTX Engineering Director Nishad Singh are also named in the statement.
FTX is excited to be regulated in Dubai by VARA! We’re excited to expand out our presence in the city, and to work with regulators who have taken the lead in establishing a regulatory framework for digital assets, protecting customers and allowing for innovation.
— SBF (@SBF_FTX) October 17, 2022
FTX is delighted to be regulated in Dubai by VARA! We are delighted to expand our presence in the city and to work with regulators who have taken the lead in establishing a regulatory framework for digital assets, protecting customers and enabling innovation.
In happier news for the cryptocurrency exchange, Bankman-Fried announced on Twitter on Oct. 17 that the company has been registered by the Dubai Virtual Assets Regulatory Authority. Its subsidiary FZE had received a Minimum Viable Product license in July.
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