Former FTX CEO Sam Bankman-Fried gained an early victory in a case regarding Texas securities legal guidelines, in accordance with Bloomberg Information reported Feb. 2.

The Texas State Securities Board (TSSB) filed allegations towards Bankman-Fried last October. At the moment, the regulator mentioned that Bankman-Fried had violated state securities legislation when FTX US supplied yield-bearing merchandise to prospects in the USA.

At the moment, Texas decide Sarah Starnes dominated that the state securities regulator doesn’t have jurisdiction over Bankman-Fried, who just isn’t a resident of Texas.

Choose Starnes canceled a listening to scheduled for right now that might have seen Bankman-Fried give testimony on the matter. The decide may even enable the TSSB to contest the choice by submitting an amended grievance earlier than March 1. Bloomberg mentioned the company has not indicated whether or not it’ll problem right now’s final result.

Previous to the decide’s ruling, Bankman-Fried’s legal professionals criticized the TSSB’s stance, arguing that its allegations solely said that Bankman-Fried managed FTX’s numerous entities. As a result of different members of FTX could have didn’t disclose info to prospects, Bankman-Fried didn’t essentially violate Texas rules himself.

Joe Rotunda, the Texas Securities Board’s Director of Enforcement, mentioned in any other case. He argued that Bankman-Fried had chosen for his firm to promote securities to Texas residents and that he, due to this fact, “subjected himself to the jurisdiction of Texas’ courts” ⁠— an assertion that Choose Starnes apparently disagreed with right now.

The TSSB finally aimed to supply refunds to affected FTX customers by imposing penalties. Had it succeeded, Bankman-Fried could have confronted fines as much as $20,000 per state legislation violation and fines as much as $250,000 for every Texas resident affected above the age of 65.

The TSSB’s case is separate from the federal authorities’s ongoing criminal case towards Bankman-Fried. Rotunda beforehand mentioned that his company’s actions wouldn’t intrude with the prison case. He additionally mentioned that the TSSB introduced its case ahead as a result of Bankman-Fried just isn’t personally bankrupt ⁠— in contrast to his firm, FTX, which is bankrupt.

Bloomberg famous that different state regulators have largely kept away from taking motion as a consequence of Bankman-Fried’s prison case and FTX’s chapter case.

Posted In: FTX, U.S., Crime, Legal

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