The dramatic collapse of the FTX cryptocurrency exchange last month sent shockwaves through the entire cryptocurrency industry. Millions of FTX users have lost their hard earned money trading with FTX.
The situation with FTX has prompted the SEC to muster enough legal ammunition that might lead to considering the banning of digital assets and other centralized crypto exchanges.
Earlier this week, on Wednesday, the US Securities and Exchange Commission (SEC) announced charges once morest two major allies of FTX founder Sam Bankman-Fried. He is the co-founder of FTX, Gary Wang, and former Alameda Research CEO Caroline Ellison. The duo pleaded guilty to federal authorities.
SEC: The FTX token (FTT) is a security
In another development, the SEC said that the native FTT token of the FTX exchange sold as an investment contract was a “security”. In his complaint to the court, the SEC said :
“If demand for trading on the FTX platform increases, demand for the FTT token may increase, so any increase in the price of FTT would benefit FTT holders equally and directly proportional to their FTT holdings. The large allocation of tokens to FTX prompted the FTX management team to take action to attract more users to the exchange and thereby increase the demand and exchange price of the token FTT. “
As a result, the SEC also charged Caroline Ellison and Gary Wang with securities fraud for offering FTTs as unregistered securities and for manipulating the price of FTTs. The SEC also called the FTT token “illiquid crypto-asset“.
In addition, the securities regulator also mentioned the program “buy and burnfrom the SEC, adding that this move, along with several other exchange tokens, is similar to a stock buyback in which FTX’s earnings would buy back and burn FTT, thereby increasing its value.
The SEC should ban cryptocurrencies
Earlier this week, Sherrod Brown, Chairman of the US Senate Banking Committee, said the SEC and CFTC should consider banning cryptocurrencies. The US Banking Commission has jurisdiction over all financial institutions in the United States. During an appearance on the show “Meet the Press” from NBC on December 18, Sherrod Brown said:
“We want them [la SEC et la CFTC] do what they have to do at the same time, maybe ban it, although banning it is very difficult because it would go abroad, and who knows how that would work”.
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