Texas State Securities Board blames Sam Bankman-Fried for violating the Securities Act.
The Texas State Securities Board (SSB), an Austin-based Texas state agency, has called former FTX CEO Sam Bankman-Fried to testify in the February 2nd hearing.
According to the Notice of Hearing signed by Texas State Securities Board director of enforcement, Joe Rotunda, FTX US has unlawfully offered unregistered securities through its “EARN” accounts.
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On top of that, the Texan securities regulator claims that while being FTX CEO, Sam Bankman-Fried violated the Securities Act. Regarding the matter, the Notice reads:
Respondent [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.
The regulators hope that the court hearing would rule a Cease and Desist order, restricting FTX's ability to engage “in fraud in connection with the offer or sale of securities in Texas.”
SSB’s director of enforcement Joe Rotunda expects the judge to order the former FTX CEO to return money that Texans invested into “unregistered EARN accounts.” On top of that, regulators are asking a judge to issue an “administrative fine” to Sam Bankman-Fried.
If the judge agrees with the proposal, Bankman-Fried could be fined up to $20,000 per violation. It is worth noting that the fine could reach up to $250,000 for every “illegal or fraudulent act” performed against Texans older than 65 years old.
The hearing is set to take place on February 2nd, 2023, with Sam Bankman-Fried, allowed to attend via Zoom.
It is worth noting that The Texas State Securities Board started the investigation on FTX Trading, FTX US, and their directors, including founder and CEO Sam Bankman-Fried, on October 14th.
At that time, regarding the investigation, an FTX spokesperson noted:
We have an active application for a license that has been pending and believe we are operating fully within the bounds of what we can do in the interim. We look forward to continuing working with Texas.
However, everything went crashing when on November 11th, FTX filed for bankruptcy.