SBF wins Texas case alleging violations of securities laws via FTX offerings

SBF wins Texas case alleging violations of securities laws via FTX offerings

Feb. 2, 2023 at 9:29 pm

By Mike Dalton

The Texas State Securities Board has no jurisdiction over the former FTX CEO.

Former FTX CEO Sam Bankman-Fried gained an early victory in a case concerning Texas securities laws, according to Bloomberg News reported Feb. 2.

The Texas State Securities Board (TSSB) filed allegations against Bankman-Fried last October. At that time, the regulator said that Bankman-Fried had violated state securities law when FTX US provided yield-bearing products to customers in the United States.

Today, Texas judge Sarah Starnes ruled that the state securities regulator does not have jurisdiction over Bankman-Fried, who is not a resident of Texas.

Judge Starnes canceled a hearing scheduled for today that would have seen Bankman-Fried give testimony on the matter. The judge will also allow the TSSB to contest the decision by filing an amended complaint before March 1. Bloomberg said the agency has not indicated whether it will challenge today’s outcome.

Prior to the judge’s ruling, Bankman-Fried’s lawyers criticized the TSSB’s stance, arguing that its allegations only stated that Bankman-Fried controlled FTX’s various entities. Because other members of FTX may have failed to disclose information to customers, Bankman-Fried did not necessarily violate Texas regulations himself.