Former FTX CEO called to hearing by Texas Securities Board

Tech

CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee

(NewsNation) — Sam Bankman-Fried must answer whether his now disgraced former cryptocurrency exchange FTX Capital Markets LLC offered unregistered securities products through its yield-bearing service.

Called by the Texas State Securities Board (TSSB), an administrative hearing will explore if FTX — which is still registered as a dealer with the board — is guilty of security violations.

“Texans were able to buy and sell publicly traded stock through the firm,” a hearing notice dated Nov. 22 states, CoinDesk reported.

Bankman-Fried was reportedly informed of the hearing notice through a letter that was sent to his home address in the Bahamas. The hearing, which is set for Feb. 2, 2023, could be conducted over Zoom.

TSSB’s investigation into FTX became public knowledge in October when the agency’s director of enforcement, Joe Rotunda, laid out his allegations with the exchange in the Voyager Digital bankruptcy case.

According to Rotunda, the enforcement action was a last resort, as TSSB prefers working through issues with companies.

“I do not want to solve matters with an enforcement action that can be solved with a telephone call,” Rotunda said during a panel discussion with FTX general counsel Ryne Miller in New York in October.

FTX ultimately ended up being uncooperative, leading to the hearing letter.

The hearing comes as the embattled American entrepreneur — once compared to finance savants John Pierpont Morgan and Warren Buffett — is drowning in bankruptcy proceedings while under investigation by both the Securities and Exchange Commission and the Department of Justice.

Just last month, FTX was worth $32 billion. Now, not only has Bankman-Fried removed himself as CEO and filed for bankruptcy, but the company reportedly owes money to countless people and organizations.

According to CoinDesk, TSSB is looking for a cease-and-desist order as an outcome to halt FTX from further securities fraud in the state.

Additionally, the board hopes to reimburse affected investors for their funds and to hit Bankman-Fried with fines.

Bankman-Fried is expected to speak with Andrew Ross Sorkin of The New York Times at 5 p.m. Eastern on Nov. 30 in a no-holds-barred-style interview.

 

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