: The Securities and Exchange Commission has declared that the FTT Exchange Token is a security.
• The U.S. Securities and Exchange Commission (SEC) has charged FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison with selling the exchange token FTT as an investment contract.
• The SEC alleges that FTX would use the proceeds from the FTT sale to fund development, marketing, business operations and growth of the platform.
• The two have both pled guilty to the various charges brought before them, and are also facing Justice Department and Commodity Futures Trading Commission (CFTC) charges.
The U.S. Securities and Exchange Commission (SEC) has recently brought charges against FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison for selling exchange token FTT as an investment contract. The SEC alleges that FTX took investor funds to create a use for FTT and bring demand and value to their common enterprise, with the hopes of profiting from the venture.
The SEC complaint highlighted that FTX would use the proceeds from the FTT sale to fund the development, marketing, business operations and growth of their platform. In addition, they had a “buy-and-burn” program in place, which is akin to a stock buyback, where revenue from FTX would repurchase and burn FTT, thus increasing its value.
The SEC also noted that FTX had an incentive to attract more users onto their trading platform, as any price increase in FTT would benefit holders of FTT equally and in direct proportion to their FTT holdings.
Both Wang and Ellison have pled guilty to the various charges brought before them, and are not contesting the SEC’s allegations. The two are also facing Justice Department and Commodity Futures Trading Commission (CFTC) charges related to their conduct at FTX and Alameda, respectively.
The news of the SEC’s allegations had an immediate impact on the token’s price, with FTT skyrocketing over the last 24 hours after Sam Bankman-Fried tweeted his support of a plan to restart FTX by issuing a new FTT token and giving it to creditors and depositors. Other exchange tokens, such as Binance’s BNB, Huobi’s HT, and OKX’s OKB did not move on the news, with BNB remaining stagnant after the news broke, declining 0.17% during the Asia morning.
It is yet to be seen how the SEC’s allegations will affect the industry as a whole, but what is certain is that the charges have far-reaching implications for the cryptocurrency industry.