Texas regulators and the state’s attorney general are challenging the FTX’s acquisition of Voyager Digital, saying the state securities commissioner “will determine whether FTX US is in compliance with the law It is necessary to do so.”
Texas Securities Commission, Banking Department, and Attorney General Object to FTX’s Acquisition of Voyager Digital
Bankruptcy Court documents filed on October 14, 2022show that the Texas Securities Commission (SSB), Texas Department of Banking, and the Texas Attorney General objected to FTX’s solicitation of Voyager Digital. FTX, an exchange led by crypto billionaire Sam Bankman-Fried, made a bid to purchase Voyager Digital and its assets for $1.4 billion.
The news follows Bankman-Fried’s statements prior to the acquisition that the company was prepared to spend billions on the acquisition. Prior to the Voyager acquisition attempt, Bankman-Fried and FTX further announced at the end of July that they were “willing to do what we can to give liquidity to Voyager’s customers.”
However, Texas regulators and the state’s attorney general want to stop the acquisition because they believe that regulators and the Texas securities commissioner need to investigate FTX; FTX is a FinCEN money services provider, but the Texas SSB has not yet determined whether FTX is a “but is not registered with the Texas Department of Banking in a money transmitter or other capacity, and it is not registered as a securities dealer with the Texas Securities Commission.”
While FTX won the auction to purchase Voyager Digital, Joseph Jason Rotunda, Director of Enforcement for the Texas Department of Securities, stated that FTX may have violated securities laws stemming from the Texas Securities Act He explained that Rotunda downloaded FTX’s mobile application and informed the firm that he was a Texas resident, but that FTX’s application showed that Rotunda was “earning a yield on (Ethereum)” and that “the yield is valued at 8% APR He stated that it shows that “the yield is at 8% APR.
“An ongoing investigation by the Texas Securities Commission’s Enforcement Division, [shows] the yield program appears to be an investment contract, evidence of indebtedness and note, and as such appears to be regulated as a security in Texas as provided by Section 4001.068 of the Texas Securities Act,” Rotunda’s filing explains.” At all times material to the opening of this FTX account, FTX Trading and FTX US are not registered to offer or sell securities in Texas.” The director of the Texas SSB added:
Therefore, FTX Trading and FTX US may be in violation of Section 4004.051 of the Texas Securities Act.
On Twitter, Bankman-Fried did not comment on recent actions filed by regulators from Texas, and by the state attorney general. Furthermore, the FTX CEO has been very vocal recently about his and his company’s support for regulation. Just recently, Bankman-Friedexplained that he believes that increased regulatory oversight of the stablecoin industry is “vitally important”. On Monday, Bankman-Fried said he looks forward to FTX being regulated in Dubai.
“We are excited that FTX will be regulated in Dubai by VARA! We are excited to expand our presence in the city and work with the regulator who has led the way in establishing a regulatory framework for digital assets, protecting customers and enabling innovation,” tweeted FTX CEO
Image Credits: Shutterstock, Pixabay, Wiki Commons, Editorial photo credit: Koshiro K / Shutterstock.com.