The Texas State Securities Board (TSSB) is the latest state regulator in the US to make its name heard in the crypto regulation argument after launching a probe into Sam Bankman-Fried’s FTX trading platform.
The probe aims to investigate whether FTX.US – the US division of Bahamas-registered FTX – is offering Texas citizens unregistered securities in the firm of yield-bearing products.
While FTX is illegal in the US, subsidiary FTX.US provides limited services that are compatible with US laws.
But according to TSSB’s enforcement director Jason Rotunda, US users are able to access restricted products that are not compliant with state securities laws.
TSSB is also investigating collapsed crypto lender Voyager Digital (CSE:VYGR, OTCQX:VYGVF) (which FTX is purchasing for US$1.4bn) for the same issues.
Rotunda stated in the court filing: “I am aware that FTX Trading… may be offering unregistered securities in the form of yield-bearing accounts to residents of the United States.
“These products appear similar to the yield-bearing depository accounts offered by Voyager Digital, and the enforcement division is now investigating FTX Trading, FTX US, and their principals, including Sam Bankman-Fried.”
FTX’s Voyager acquisition faces challenge
The probe could throw a spanner in the works for FTX’s acquisition of Voyager Digital.
“FTX.US should not be permitted to purchase the assets of (Voyager Digital) unless or until the Securities Commissioner has an opportunity to determine whether FTX.US is
complying with the law,” said Rotunda.
However, the Voyager Digital bankruptcy is being held in the New York courts, so TSSB’s has limited influence on the acquisition.
Responding to the probe, a statement released by FTX said: “We have been in talks with the Texas state regulator for a while… We have an active application for a license which has been pending, and believe we are operating fully within the bounds of what we can do in the interim.
“We look forward to continue working with Texas.”