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FTX Not Yet Facing Enforcement Action, Says Texas Securities Regulator
A Texas regulator who asked a judge to pause FTX’s acquisition of crypto lender Voyager’s assets has clarified that state authorities have not yet taken a position on whether the crypto exchange broke the law.
Himanshu S.
8:35 24th Oct, 2022
Policy

The Texas securities regulator who asked a judge to put a hold on FTX’s acquisition of the assets of failing crypto lender Voyager clarified that an enforcement action against the crypto giant isn’t a given.

“It was a declaration that talked about an investigation,” said Joseph Rotunda, director of the Texas State Securities Board’s enforcement division. “It means we’re gathering information.”

Last week, the TSSB wrote a judge overseeing the auction process for Voyager's remaining assets with a request to pause that acquisition until regulators from the state complete an investigation into whether the exchange complies with securities laws.

The filing noted that Rotunda was able to register for an FTX account and earn a yield on it, indicating that the company may not be in compliance with state and federal financial laws. But Rotunda clarified that he's not ready to make allegations yet.

Speaking at a Rutgers Law School event hosted in New York by the law firm Lowenstein Sandler, Rotunda said that he and his bosses have not yet pursued an enforcement action against FTX.

“If I was ready to make an accusation, and it got to the point of being about an enforcement action, I will make my accusations in a public document,” he said.

Rotunda, who sat on the panel with FTX.US General Counsel Ryne Miller, added that his agency coordinates with federal counterparts at the Securities and Exchange Commission and Commodity Futures Trading Commission.

But Rotunda also said that despite his position as enforcement director for the state regulatory agency, “I do not like filing enforcement actions.”

“I do not want to solve matters with an enforcement action that can be solved with a telephone call,” he added.

FTX’s Miller reiterated his company’s call for a regulatory shift on digital assets in the U.S., including support for a bill that’s been a source of pushback by other industry participants.

“I hope that we as an industry and a regulatory community, focus on getting that right and not stopping the U.S. growth of digital asset markets,” said Miller.

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