Former FTX CEO Sam Bankman-Fried has won an early victory in a lawsuit over Texas securities law, according to Bloomberg News. report February 2.
The Texas Securities Commission (TSSB) filed a complaint against Bankman-Fried last October. At the time, regulators said Bankman-Fried violated state securities laws when FTX US offered yield products to U.S. customers.
Today, Texas judge Sarah Stearns ruled that the state’s securities regulators have no jurisdiction over Bankman-Fried, who is not a Texas resident.
Judge Stearns canceled today’s scheduled hearing in which Bankman-Fried was scheduled to testify in the case. will allow you to object to
Prior to the judge’s ruling, Bankman-Fried’s attorneys criticized the TSSB’s position, arguing that its allegations merely stated that Bankman-Fried controlled various FTX entities. Bankman-Fried himself did not necessarily violate Texas regulations, as other members of FTX may not have disclosed the information to their customers.
Joe Rotunda, director of enforcement for the Texas Securities Commission, said not. He argued that Bankman-Fried “subjected itself to the jurisdiction of the Texas courts” because his company chose to sell securities to Texas residents— Judge Starnes claimed today that he clearly disagreed.
TSSB ultimately aimed to provide refunds to affected FTX users by imposing penalties. If successful, Bankman-Fried could have faced fines of up to $20,000 for each violation of state law and up to $250,000 for each affected Texas resident over the age of 65. I have.
The TSSB case is separate from the federal government’s ongoing criminal proceedings against Bankman-Fried. Rotunda had previously said his agency’s actions would not interfere in criminal cases.He also said that unlike his company, FTX, which went bankrupt, Bankman-Fried is personally bankrupt. TSSB has filed a lawsuit because it did not.
Bloomberg noted that regulators in other states have largely held back on action due to the Bankman-Fried criminal case and the FTX bankruptcy case.