An Official Notice That Request SBF's Testimony

The Texas State Securities Board (TSSB) started the investigation into whether FTX violated securities laws with its offerings of the yield-generating EARN product. The FTX founder Sam Bankman-Fried is being summoned by the Texas Securities Regulator to appear during an administrative hearing on February, 2023.

The TSSB accuses Bankman-Fried of violating the Securities Act by selling securities in Texas that are not registered for sale and for failing to register as a security dealer or agent.

Violations of The Securities Act

The hearing notice mentioned that “The EARN accounts are investment contracts, evidence of indebtedness, and notes and are therefore regulated as securities as that term is defined by Section 4001.068 of the Securities Act. SBF 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.

In addition, the notice stated that “After filing the Objection and Declaration, the Enforcement Division communicated with FTX US and FTX US provided various representations relating to the EARN accounts. But the information provided by FTX US does not impact the conclusion that the EARN accounts are regulated as securities in Texas. FTX US, moreover, has not yet provided requested information that would verify the accuracy of the information provided to the Enforcement Division.”

The Hearing

According to the official hearing notice, the TSSB informs Bankman-Fried that he can give his testimony during the hearing, which will be held through video conferencing platform Zoom.

The hearing will be held before the State Office of Administrative Hearings. It will commence at 9:00 AM on February 02, 2023. The State Office of Administrative hearings will provide instructions for accessing the hearing via Zoom.

“At the hearing, the Enforcement Division will present testimony and other admissible evidence in support of its prayer for a proposal for decision for the entry of a cease and desist order, order assessing an administrative fine, and order for the payment of refunds against Respondent. Respondent will be afforded the right to present such testimony and other evidence related thereto.”

Mark Cuban, Shark Tank investor and crypto bull, recently talked about the FTX fallout and SBF in an interview with TMZ Sports on November 26, 2022. He said the 30-year old could face lengthy jail time. “I don’t know all the details, but if I were him, I’d be afraid of going to jail for a long time… It sure sounds bad. I’ve actually talked to the guy and thought he was smart,” he added.