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U.S. SEC calls FTX’s native token FTT a security



United States SEC calls FTX's native token FTT a security
Source: Unsplash

  • The SEC has alleged in its complaint that FTX’s native token FTT is a “security.”
  • SEC has filed cases against FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison. 

The United States Securities and Exchange Commission (SEC) has alleged in its complaint filed on 21 December that the now-bankrupt crypto exchange FTX’s native token FTT was sold as an investment contract, and is a “security.”

As the demand for trading on the FTX exchange increased, so would the demand for the FTT token so that an increase in FTT’s price would benefit holders of FTT in proportion to their FTT holdings.

The large allocation of tokens to FTX incentivized the FTX management team to take steps to attract more users to the trading platform, increasing demand for the FTT token, and increasing its trading price in turn.

SEC’s complaint also alleges that FTX intended to use the proceeds from the token sale to fund the development, marketing, business operations, and growth of FTX while emphasizing that the FTT token is a profitable investment.

SEC’s complaint also mentions FTT’s buy-and-burn program. This program is similar to a stock buyback in which FTX revenue is used to repurchase and burn FTT, increasing its value.

FTX Co-founder and former Alameda Research CEO plead Guilty

The SEC made these claims in a complaint filed against FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison. Both Ellison and Wang have pleaded guilty to the various charges brought against them and have not challenged the allegations of SEC.

In addition, the Department of Justice and the Commodity Futures Trading Commission (CFTC) are also prosecuting the duo over their actions at FTX and Alameda, respectively.

Investors in FTT had a reasonable expectation of profiting from FTX’s efforts to employ the monies raised from investors to put FTT to use and generate demand and value for their joint venture.

The implication of the SEC’s allegations has wider repercussions for the crypto industry. We should also take note of the fact that the SEC and the CFTC have been battling over the jurisdiction of different crypto tokens.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot's writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S - There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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