SEC qualifies FTX’s native token as a security
That is what the US Securities and Exchange Commission’s complaint against former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang says
22.12.2022 - 13:00
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What’s new? The US Securities and Exchange Commission (SEC) claims that the native token FTT of the bankrupt crypto exchange FTX was selling as an investment contract and is a security. The SEC explained that the release of a large number of FTT prompted the platform’s leadership to take steps to increase the number of users to increase the demand and trading price of the asset. That is what the SEC’s complaint against FTX co-founder Gary Wang and former CEO of trading firm Alameda Research (part of FTX Group) Caroline Ellison says.
What else does the lawsuit say? FTT’s White Paper states that the proceeds from the sale of tokens were used to fund FTX’s development, marketing, business operations, and growth. However, the SEC stressed that FTT was filed as an investment with potential profits.
A White Paper is a document that describes the concept of the project and its roadmap.
FTT's “buy-and-burn” program was also mentioned. This initiative, used by many other exchange tokens, is similar to a stock buyback. According to the program, FTX was supposed to buy back and then burn some of FTT, thereby increasing the value of the coins. The FTT concept also noted that its owners could receive discounts on fees and use the asset as collateral in futures positions and margin trading, which would supposedly be launched on the platform in the future.
Cryptocurrency burning is the process of removing a certain number of tokens from circulation, after which they become permanently inaccessible. Often burning is carried out in order to increase the rate of an asset or prevent it from inflation. Burning can be done by sending tokens to a wallet without a private key, by conducting a hard fork, using special software, or using algorithms that destroy some of the funds during transactions.
Wang and Ellison previously pleaded guilty to charges by the US Attorney’s Office for the FTX crash and cooperate with law enforcement. Ellison may be exempted from further criminal prosecution on the terms of her continued cooperation. In that case, she must pay bail and not leave the continental United States.
FTX founder and former CEO Sam Bankman-Fried was arrested on December 12 in the Bahamas at the request of the US Attorney’s Office. On December 13, the SEC charged him with fraud. On December 21, under FBI supervision, Bankman-Fried was extradited to the States, and he is scheduled to appear in court to testify on December 22.
To find out what Alameda Research invested billions of dollars in, as well as what awaits Bankman-Fried himself, see GetBlock Magazine’s materials.
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