The US Securities Commission (US SEC) describes FTX’s native token as a security

  • In its complaint, the SEC alleged that FTX’s original FTT token was a “security.”
  • The Securities and Exchange Commission (SEC) has filed cases against FTX co-founder Gary Wang and former Alameda research chief Carolyn Ellison.

The US Securities and Exchange Commission (SEC) alleged in its December 21 complaint that cryptocurrency exchange FTX’s native FTT token was sold as an investment contract and is a “security.”

As the demand for trading on the FTX exchange increases, the demand for the FTT token will also increase so that the increase in the price of FTT will benefit FTT holders in proportion to their FTT holdings.

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

The SEC complaint also alleges that FTX intends to use the proceeds from the token sale to fund the development, marketing, business, and growth of FTX while asserting that the FTT token is a profitable investment.

The SEC complaint also refers to FTT’s buy-and-burn program. This program is similar to a stock buyback where the proceeds from FTX are used to buy back and burn FTT, increasing its value.

FTX co-founder and former CEO of Alameda Research pleads guilty

The SEC made the allegations in a complaint against FTX co-founder Gary Wang and former Alameda Research CEO Caroline Ellison. Ellison and Wang both pleaded guilty to various counts and pleaded not guilty to the charges brought by the SEC.

Additionally, the Department of Justice and the CFTC are charging the duo for their actions in FTX and Alameda, respectively.

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

The implications of the SEC accusations have broader ramifications for the cryptocurrency industry. We should also note the fact that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been fighting over the jurisdiction of various cryptocurrency tokens.

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