SEC Reported FTT Exchange Token a Security

  • The SEC filed against FTX co-founder Mr. Wang & Caroline Ellison.
  • The agency has mentioned FTT Exchange Token as “security.”
  • The Justice Department and CFTC are also lined up to charge.

SEC filed a complaint

On December 21, late Wednesday, the United States Securities and Exchange Commission (SEC) filed a complaint against Gary Wang, FTX co-founder and former Alameda Research CEO Caroline Ellison. The regulator has mentioned in a complaint that the exchange native token FTT was sold as an investment contract and is a “security.”

It is mentioned in the complaint that FTX has used the pooled proceeds from the FTT sales to fund the development, marketing, business operations, and growth of FTX to attract users toward the platform. The SEC wrote in its complaint, “If demand for trading on the FTX platform increased, demand for the FTT token could increase, such that any price increase in FTT would benefit holders of FTT equally and in direct proportion to their FTT holdings.” 

The exchange used their token as an investment for profit potential. SEC added, “The large allocation of tokens to FTX incentivized the FTX management team to take steps to attract more users onto the trading platform and, therefore, increase demand for, and increase the trading price of, the FTT token.”

 “The FTT materials made clear that FTX’s core management team’s efforts would drive the growth and ultimate success of FTX,” the complaint read.

In the complaint, the exchange white paper explains the scheme to increase the demand and decrease the FTT tokens’ circulating supply, the “buy and burn” concept. Some other exchange tokens also used this initiative with the motive of the same concepts.

Ellison and Wang have both pleaded guilty to all the alleged charges. They both are unable to oppose any allegations charged by the SEC, the regulating authority stated in a press release. Also, they both are facing charges alleged by the Justice Department and Commodity Futures Trading Commission (CFTC) for conducting illegal activity at FTX and Alameda.

“FTT investors had a reasonable expectation of profiting from FTX s efforts to deploy investor funds to create a use for FTT and bring demand and value to their common enterprise.” the SEC added.