The Texas State Securities Board (TSSB) subpoenaed Sam Bankman-Fried to testify during an administrative hearing scheduled for February 2, 2023. The move marks the expansion of other enforcement agencies’ investigations into FTX’s post-insolvency activities.
The founders of FTX are invited to discuss whether certain credit offers violate the Securities Act, as well as the consequences of bankruptcy exchange. Texas regulators have been investigating FTX US since October for allegedly offering unregistered securities products through its returns service.
Earlier this month, the board had expanded the probe to examine the impact of this billion-dollar bankruptcy. The watchdog also began investigating celebrities who have endorsed FTX for potentially violating state securities laws. This includes promotions by Golden State Warriors’ Steph Curry and Tampa Bay Buccaneers’ Tom Brady, who are now part of this wider investigation.
FTX US, a cryptocurrency company that is currently in bankruptcy, is said to be regulated as a Money Services Business with FinCEN. It also runs a money transmitter business with various states and is called the license when it gives Texans the opportunity to deposit fiat or cryptocurrencies in accounts that generate income.
“In connection with the offer of EARN accounts in Texas, the Respondent willfully failed to disclose material facts, including but not limited to the amount of money or cryptocurrency dedicated to the permissive use, the identity, nature, and credibility of the borrowers, the type and nature of transactions involving digital assets , equities, options, and futures, risks associated with digital assets, equities, options, and futures, profits and/or losses arising from transactions, and financial information that describes assets and liabilities and cash flows, the statement reads.
The Texas regulator is one of the most active state regulators in the crypto arena, joining federal authorities in efforts to keep businesses from registering.
TSSB initially focused mainly on ICO campaigns, which included the sale of digital tokens related to blockchain projects. This was highlighted by the agency’s flagship case against BitConnect, a folded ICO project accused of defrauding millions of investors.
Texas joined other state securities regulators in the pursuit Voyager and other crypto companies to offer yield-generating crypto accounts, which regulators say are unregistered securities that do not disclose risks to investors.