- SEC stated SBF directed Ellison to Alameda to acquire billions of dollars from third-party lenders.
- FTT tokens plummeted around 35%, reaching a new low of $0.855 on December 22.
The U.S. Securities and Exchange Commission (SEC) stated that FTX’s native token, “FTT was Offered and Sold as an Investment Contract and as a Security.” The claim was made by SEC in a lawsuit filed against the FTX executives Caroline Ellison and Gary Wang on 21st December 2022.
According to SEC, Sam Bankman-Fried directed Ellison for trading firm Alameda to acquire billions of dollars from third-party lenders. Alameda holds significant portation of crypto asset FTT that was issued by FTX and delivered to the trading company at no cost.
Also, SEC claims, Bankman-Fried and Wang had exempted Alameda from the risk management procedures and offered a nearly unlimited “line of credit” funded by the platform’s users, with Ellison’s knowledge and consent.
FTX violated the Procedures
Before the launch of the FTX exchange, it minted 350 million FTT tokens. In that, 175 million were categorized as “company tokens” for FTX and 175 million as “non-company tokens.” The company tokens were planned to “unlock” over three years following a token’s so-called initial exchange offering (IEO).
Further, the crypto exchange FTX offered and sold over 73 million FTT in so-called “pre-sales” to investors prior to the IEO. At prices ranging from $0.10 to $0.80, out of the 175 million non-company tokens. Also, FTX generated almost $10 million in this pre-sales.
However, FTX raised more than $1.8 billion from investors, including U.S. investors. They acquired stock in FTX with the belief that the crypto exchange had adequate controls and procedures for risk management.
- blockchain compliance
- blockchain conference
- crypto conference
- crypto mining
- Digital Assets
- Exchange News
- machine learning
- non fungible token
- plato ai
- Plato Data Intelligence
- proof of stake