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Sam Bankman-Fried And FTX Trading Under Investigation By U.S. Regulator

18 Oct, 20223 min readRegulation
Sam Bankman-Fried And FTX Trading Under Investigation By U.S. Regulator

Per a report from Barron’s, FTX CEO Sam Bankman-Fried and other subsidiaries of these platforms are under investigation by the Texas securities regulator. The executive and affiliated entities will be under probe for their alleged offering of unregistered securities.

The Texas States Securities Board and the Texas Department of Banking filed a motion with the U.S. Bankruptcy Court in the Southern District Of New York, according to the report. The regulator will look into Sam Bankman-Fried, FTX Trading, and FTX US in relation to the Voyager Digital case.

This platform was one of the three major crypto-lending companies that filed for bankruptcy in the United States after halting operations for its users. Negatively impacted by the collapse of the crypto market, Voyager Digital was forced to declare bankruptcy.

In the months after its filing, FTX and Sam Bankman-Fried attempted to acquire Voyager assets. Additional reports confirmed that the crypto exchange platform won the bid for these assets valued at around $1.4 billion.

Voyager Digital and two of its subsidiaries are currently in a legal battle with the Enforcement Division. The regulator and its enforcement arm are accusing the platform of offering unregistered securities to U.S. citizens.

Due to the Sam Bankman-Fried and FTX acquisition of Voyager’s assets, the Texan regulator launched this probe. Per the filing with the U.S. bankruptcy court:

FTX US claims to be regulated as a Money Services Business with FinCEN (No. 31000195443783) and as a money transmitter, a seller of payment instruments and in other nonsecurities capacities in many different states. It is not, however, registered as a money transmitter or in any other capacity with the Texas Department of Banking and it is not registered as a securities dealer with the Texas State Securities Board.

Sam Bankman-Fried And FTX Under The Eye Of Regulators?

The document filed by the Texan regulator claims that an agent within their enforcement division was able to access trading within FTX. These individuals allegedly provided their place of residency, the U.S., and other personal information.

However, the platform still enabled him to allegedly download FTX, transfer funds from his FTX.US account to the global crypto exchange, and access “unregistered securities”. The document noted:

Based upon my earning of yield and an ongoing investigation by the Enforcement Division of the Texas State Securities Board, the yield program appears to be an investment contract, evidence of indebtedness and note, and as such appears to be regulated as a security in Texas (…).

Depending on the result of the investigation, the crypto exchange might be blocked from purchasing the assets of Voyager Digital. In addition, this probe might allow other U.S. regulators, including the Securities and Exchange Commission (SEC) to conduct their own investigation.

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