Using his own information, the Texas State Securities Board enforcement director downloaded an FTX trading app (not an FTX US app) and was able to earn interest on it.
In a supplemental declaration submitted on October 14 in the Voyager Digital case, the Texas State Securities Board, or SSB, and the Texas Department of Banking stated that the SSB is looking into FTX Trading, FTX US, and their principals, including co-founder and CEO Sam Bankman-Fried, for allegedly offering unregistered securities in the United States.
This comes as FTX US prevailed in the auction for the last of the Voyager Digital assets back on September 26.
Voyager Digital and FTX are accused of breaking Texas law in that objection, and the state also asserts that “the proposed sale, or order sanctioning the sale, intends to reduce the Debtors’ culpability for unlawful […] activity for which state-regulatory fines and penalties may apply.”
In particular, the objection claimed that because Voyager Digital was not registered as a security dealer in Texas, it carried out money transmissions without a license.
Joseph Rotunda, the director of the SSB enforcement division, claimed in the declaration that using his own name and Austin, Texas, address, he was able to download the FTX Trading app to his smartphone and open a yield-bearing account. In the US, FTX Trading doesn’t operate a business.
“FTX US should not be allowed to purchase the debtor’s assets unless or until the Securities Commissioner has an opportunity to examine whether FTX US is complying with the law,” Rotunda said in his conclusion.
In July, Voyager Digital filed for bankruptcy.
The Southern District of New York United States Bankruptcy Court is now hearing its case. The declaration also names FTX director of engineering Nishad Singh and co-founder and chief technology officer Gary Wang.