Sam Bankman-Fried, the former CEO of FTX, has been invited to a hearing on February 2 by the Texas securities regulator as part of a probe into possible violations of Texas securities laws by FTX US and Bankman-Fried.
In a Notice of Hearing approved by Joe Rotunda, director of enforcement for the Texas State Securities Board (SSB), and delivered to Bankman Fried on November 29, the regulator asserts that FTX US sold unregistered securities to Texans through its “EARN” accounts.
Prior to FTX’s worldwide operations experiencing a dramatic collapse and bankruptcy, the investigation was first made public on October 14. At the time, the regulator declared it was looking into FTX Trading, FTX US, and its owners, Sam Bankman-Fried, for selling unregistered securities through their yield-bearing products.
Rotunda earlier tweeted and urged FTX clients to contact him
On November 18, Rotunda urged anyone who had previously used FTX and lived in Texas to get in touch with him via Twitter.
The SSB claimed in its most recent notice that Sam Bankman-Fried had broken the Securities Act while serving as the CEO of FTX at the time.
“Respondent [Sam Bankman-Fried] violated Section 4003.001 of the Securities Act by offering and selling securities in Texas that were not registered or permitted for sale in Texas.” “It also didn’t register as a dealer or agent in Texas,” said Rotunda.
To stop SBF’s exchange from “engaging in fraud in correlation with the offer or sale of securities in Texas,” the regulator stated that it hoped the hearing would result in a Cease and Desist order.
Additionally, Bankman-Fried was “pray[ing]” for the judge to order the company to repay Texan investors who made investments in its “unregistered EARN accounts.”
The regulator also requests that Bankman-Fried be subject to consideration for an “administrative fine” should he have profited financially from the violations of the securities laws. The maximum fine would be $20,000 per offense, but it could be as much as $250,000 for every “illegal or fraudulent act” committed against Texans over the age of 65.
Bankman-Fried can use Zoom to attend the hearing, which will start at 9 a.m. local time on February 2, 2023, according to Rotunda.