![Law Firm Subpoenas FTX Co-Founder, Top Executives, and Former Alameda CEO Over Voyager Digital Deal Law Firm Subpoenas FTX Co-Founder, Top Executives, and Former Alameda CEO Over Voyager Digital Deal](https://static.news.bitcoin.com/wp-content/uploads/2023/02/serveddddd-768x432.jpg)
The Texas Securities Board has asked the judge to consider leveling a cease-and-desist order, administrative fines, and forced refunds against SBF and FTX US.
Former FTX CEO Sam Bankman-Fried has been called to a Feb. 2 hearing by the Texan securities regulator as part of an investigation into whether he and FTX US have violated Texas securities laws.
In a Notice of Hearing signed off by Texas State Securities Board’s (SSB’s) director of enforcement Joe Rotunda and served to Bankman Fried on Nov. 29, the regulator alleges that FTX US offered unregistered securities to Texans through its “EARN” accounts.
The investigation was first announced on Oct. 14, before the dramatic collapse and bankruptcy of FTX’s global operations. The regulator announced at the time it was investigating FTX Trading and FTX US and its principals including Sam Bankman-Fried for offering unregistered securities through its yield-bearing products.
On Nov. 18, Rotunda used Twitter to appeal to the public to reach out to him if they were a previous client of FTX and based in Texas.
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 jrotunda@ssb.texas.gov.
— Joe Rotunda (@joe_rotunda) November 18, 2022
In the latest notice, the SSB alleged that Sam Bankman-Fried violated a section of the Securities Act during his role as the then-CEO of FTX.
“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,” said Rotunda, adding it also didn’t register as a dealer or agent in Texas.
The regulator said it hoped that the hearing will 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.”
It was also “praying” for the judge to order Bankman-Fried to return money to Texan customers that had invested in its “unregistered EARN accounts.”
The regulator also wants consideration of an “administrative fine” to be issued to Bankman-Fried should he have gained any economic benefit from the securities law violations. This amount wouldn’t exceed $20,000 per violation but could go to $250,000 for every “illegal or fraudulent act” that was perpetrated against Texans over the age of 65.
Rotunda said the hearing will commence at 9am local time on Feb. 2, 2023, and Bankman-Fried can attend the hearing using Zoom.
Related: ‘I never opened the code for FTX’: SBF has long, candid talk with vlogger
Bankman-Fried is understood to currently be in the Bahamas.
In a recently published interview between crypto blogger Tiffany Fong and Bankman-Fried, the former FTX CEO expressed remorse over his handling of FTX and the bankruptcy filing.
“You don’t get into the situation we got in if you, like, make all the right decisions,” he said in the recently released Nov. 16 interview.
The Texas State Securities Board is scrutinizing payments received by celebrities to endorse FTX US, as part of a wider probe into FTX's collapse.
NFL quarterback Tom Brady and NBA point guard Stephen Curry are reportedly among the celebrities facing a probe from the Texas financial regulator over their promotion of the now-bankrupt crypto exchange, FTX.
Joe Rotunda, director of enforcement at the Texas State Securities Board reportedly told Bloomberg in a Nov. 22 report that the Texas State Securities Board is scrutinizing payments received by celebrities to endorse FTX US, what disclosures were made and how accessible they were for investors.
Rotunda however noted that while the watchdog was taking a "close look at them," the celebrities’ endorsements of FTX were not an "immediate priority,” but would be part of the “regulator's larger probe into FTX's collapse."
Both Brady and Curry have also been named in a Nov. 15 class-action lawsuit against FTX, along with former FTX CEO Sam Bankman-Fried.
The lawsuit alleged that they “controlled, promoted, assisted in, and actively participated” in FTX Trading LTD and West Realm Shires Services Inc.
Others named in the class action include model Gisele Bundchen, the Golden State Warriors basketball team, NBA player Udonis Haslem and co-creator of Seinfeld Larry David.
Cointelegraph reached out to the Texas State Securities Board for comment but did not receive a reply before publication.
Related: The SEC should be aiming at Do Kwon, but it’s getting distracted by Kim Kardashian
In the past surveys have found that nearly half of retail investors will follow digital asset advice from the social media accounts of celebrities and influencers without question, and this has seen more than a few use their influence to shill crypto products and projects.
In October, reality TV star Kim Kardashian was fined by the United States Securities and Exchange Commission (SEC) for “touting on social media” about the EMAX without disclosing she was paid $250,000 to post about it.
Kardashian has neither admitted to nor denied the SEC’s allegations, but settled the charges and agreed to not promote any cryptocurrency assets until 2025.
Billionaire Sam Bankman-Fried’s crypto exchange platform is under investigation by the securities regulator of Texas for allegedly offering unregistered seucurities in the state. A court document related to crypto lender Voyager Digital’s bankruptcy reveals that the Texas State Securities Board’s enforcement division is investigating FTX. Joseph Rotunda, the director of the board’s enforcement division, says […]
The post Billionaire Sam Bankman-Fried and Crypto Exchange FTX Under Probe by State Securities Regulator appeared first on The Daily Hodl.
A key concern is that the firm hasn’t explicitly outlined what it will do with the stablecoin sale proceeds.
State regulators from Texas and Vermont have filed a motion objecting to embattled crypto lender Celsius’ plans to sell off its stablecoin holdings.
Separate motions from both regulators filed on Sept. 29 argue that there’s a risk the firm could use the capital to resume operating in violation of state laws.
The filings come after a Sept. 15 notice from Celsius' legal team asking the United States Bankruptcy Court for the Southern District of New York for permission to sell its stablecoin holdings, reportedly worth around $23 million. A hearing to accept or decline the motion will occur on Oct. 6.
However, the move has not gone down well with the Texas State Securities Board (SBB), the Texas Department of Banking, and the Vermont Department of Financial Regulation, who filed objections on Sept. 29.
The two Texan regulators in a joint filing outlined that “more than 40 states” are currently investigating Celsius’ pre-bankruptcy activities in relation to potential unregistered securities offerings.
Texas regulators also highlighted a concern that if Celsius sells off its holdings, the firm may resume non-compliant offerings in the state, given that it is still not registered with the Texas SBB. At the same time, the Vermont regulator also highlighted similar concerns in its own objection.
A key concern across the regulators is that the firm hasn’t explicitly outlined what it will do with the funds after it sells the stablecoins.
“It is not at all clear what the debtors intend to do with the proceeds of any such sales, whether the relief requested extends to Stablecoin-denominated assets such as retail loans to consumers, and the degree to which Debtors’ use of sale proceeds will be supervised by the Court,” the Vermont regulator's filing reads, while the Texan filing notes that:
“Texas is extremely concerned by the Debtors’ request for an order that allows ambiguously broad authority to sell and/or exchange the assets.”
As such, the state regulators are requesting that Celsius’ motion be denied, with the Texan regulators asserting that it would “only act to confound the examination and further muddy the already opaque waters that are the Debtors’ cryptocurrency assets.”
Related: FTX reportedly considers bailing out Celsius via asset bid
However, the Texan regulators also said that should the motion in question be approved, the “relief granted to the Debtors should be limited to selling stablecoin and holding the proceeds of such sale solely for the benefit of creditors of the bankruptcy estate.”
The Celsius bankruptcy case has been highly complicated thus far, given the cloudy nature of the firm’s balance sheet. Earlier this month, the United States Bankruptcy Court of the Southern District of New York granted a motion for Celsius to appoint an independent examiner to investigate aspects of its business.