In a lawsuit filed on behalf of FTX investors, former CEO Sam Bankman-Fried is accused of breaking the law by marketing yield-bearing cryptocurrency accounts at the now-bankrupt exchange.
According to Reuters, a complaint was filed against FTX on Tuesday in Miami, claiming that the exchange’s crypto-yield-bearing accounts were unregistered securities that were illegally traded in the United States.
Investors report suffering losses totaling $11 billion as a result of the exchange’s failure to follow withdrawal requests.
Numerous celebrities, including tennis star Naomi Osaka and NFL quarterback Tom Brady, were involved in the promotion of FTX, and they are all named as respondents in the lawsuit. Over the course of the past week, numerous notable sportsmen and clubs, including the Miami Heat have been seeking to end relations with the company.
FTX Isn’t The Only One In Trouble
This year many state securities regulators have gone after crypto lenders like Nexo for peddling unregistered crypto yield products. Coinbase was prohibited by the Securities and Exchange Commission (SEC) from releasing a product in September 2021 for the same reason. Chairman of the SEC Gary Gensler has voiced concern over the suspiciously high returns often offered by such cryptocurrency accounts.
At the RFK Human Rights Compass Summer Investors Conference in June, he posed the question, “How does somebody offer [such a large percentage of returns] in the market today and not give a lot of disclosure?”
The SEC and CFTC are officially looking into FTX as $10 billion in client assets may have been stolen and provided to SBF’s trading company, Alameda Research.
While FTX is still struggling from the impact of its market collapse and has filed for Chapter 11 bankruptcy, along with its Bahamas division recently filing for chapter 15 bankruptcy, further probes are rising up from various angles. A criminal inquiry into possible misbehavior by members of the Royal Bahamas Police Force was initiated recently.