FTX US Under Investigation by Texas Regulator Over Securities Allegations

Twitter icon  •  Published hace 1 año  •  Hassan Maishera

FTX US is currently under investigation by the Texas State Securities Board over allegations that it offers unregistered securities in the United States.

FTX US, the United States arm of the cryptocurrency exchange FTX, is currently under investigation by the Texas State Securities Board over allegations that it offers unregistered securities products in the country via its yield-bearing service. 

According to the report by Barrons, TSSB Director of Enforcement Joseph Rotunda made the allegations in a filing to the bankruptcy court. The court is overseeing the potential sale of Voyager Digital’s assets to the FTX cryptocurrency exchange. 

Rotunda claims that FTX US might be violating state law regarding the registration and sale of securities products as the exchange is currently offering its users a high yield-bearing product. 

Rotunda wrote that;

"As more fully explained throughout this declaration, I am aware that FTX Trading, along with West Realm Shires Services Inc. dba FTX US ('FTX US'), may be offering unregistered securities in the form of yield-bearing accounts to residents of the United States. These products appear similar to the yield-bearing depository accounts offered by Voyager Digital LTD et al., and the Enforcement Division is now investigating FTX Trading, FTX US, and their principals, including Sam Bankman-Fried."

The director also explained that he downloaded the FTX app on his mobile device, created an account, funded it, and purchased Ether with the money. Furthermore, he added that the FTX app said he was eligible for a yield-bearing account. This is against the company’s terms and conditions, which state that FTX would not provide such services to United States residents. 

The exchange’s yield service allows users to earn up to 8% APY on the first $10,000 submitted. Rotunda added that

"Despite the fact I identified myself by name and address, the FTX Trading App now shows that I am earning yield on the ETH. The yield is valued at 8% APR." 

He added that the yielding service is an investment product that would be regulated as a security in the state of Texas. However, FTX US is yet to register its yield program in the state. 

While commenting on this latest development, an FTX spokesperson said the company is currently in talks with the TSSB. The FTX spokesperson said;

"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. In parallel, we are working exceptionally hard to ensure Voyager customers get to the best possible outcome – which we believe will happen if our bid to give assets back to users is approved by the Voyager bankruptcy court. We remain hopeful that all state regulators are working towards this same goal of getting assets back to users."

Despite the investigation, FTX reviews within and outside the United States have been positive, and this could attract many stock traders to the cryptocurrency trading platform. Also, the low FTX fees also mean that the cryptocurrency exchange is growing far more quickly than any other reputable crypto trading platform.

Author

Hassan Maishera

Hassan is a Nigeria-based financial content creator that has invested in many different blockchain projects, including Bitcoin, Ether, Stellar Lumens, Cardano, VeChain and Solana. He currently works as a financial markets and cryptocurrency writer and has contributed to a large number of the leading FX, stock and cryptocurrency blogs in the world.