By
Chimamanda U. Martha
April 19th, 2024
The regulator is pursuing a cease and desist order against FTX, Administrative Fines, and a refund of the assets received from investors amongst other demands.
In an ongoing effort to uncover the mishaps that befell the FTX empire, the Texas State Securities Board (TSSB) has summoned Sam Bankman-Fried to a hearing billed to take place on February 2 next year. The TSSB has reportedly been investigating FTX US since October for allegations bordering on its offering of “Earn” which pays yields to its customers.
While Sam Bankman-Fried has long been replaced by John Ray III at the time the firm filed for bankruptcy, some of the inquiries of the TSSB as revealed are best pushed to the former who piloted the affairs of the company at the time. According to sources familiar with the summon, the TSSB sent letters to the listed residence of the disgraced crypto veteran.
The choice of date is considered flexible considering the growing number of lawmakers and law enforcement agencies that are doing all they can to get a hold of Bankman-Fried. According to the sources, the TSSB is also giving Sam Bankman-Fried an option to join the hearing through Zoom, offering more easy connectivity no matter how complicated matters get per the broader firm’s bankruptcy proceedings by then.
Despite the current allegations of impropriety, the TSSB said FTX Capital Markets LLC is registered as a dealer with it, and “Texans were able to buy and sell publicly traded stock through the firm,” as detailed by the hearing notice that was dated Nov. 22. When the regulator’s top official Joe Rotunda first revealed the board’s intentions to probe the exchange, the verdict at the time was that FTX US was cooperative with its questioning.
The regulator is pursuing a cease and desist order against FTX, Administrative Fines, and a refund of the funds received from investors amongst other demands.
FTX and Texas Regulator’s Crackdown: Where Will the Money Come From
With the United States Securities and Exchange Commission (SEC), the Department of Justice (DOJ), the Bahamian police, and Senators Elizabeth Warren (D-Mass.) and Dick Durbin (D-Ill.) amongst those investigating the FTX Empire, the Texas regulator’s inclusion is only complicating issues for the beleaguered trading platform.
FTX said it has less than $1.5 billion in cash, a fund pool that will not even cover repaying the trading platform’s top 50 creditors. With the cash strap, there is a high certainty that the funds to pay any form of fines may not really be there. Should the TSSB insist on the refund of funds to customers in the state, all other states may want to explore that option, further straining the available balances earmarked to pay creditors.
FTX is depending on its solvent subsidiaries to release funds that can help it stay afloat throughout this bankruptcy proceedings. One of these, LedgerX revealed earlier its plans to release the sum of $175 million to back the exchange’s capital pool in these trying times.