SEC Calls The FTT Exchange Token A Security 

According to a complaint filed late Wednesday by the Securities and Exchange Commission, FTX‘s exchange FTT token was advertised as an investment contract and security, an allegation that is guaranteed to have a substantial impact on the industry.

The SEC claimed that any increase in the value of FTT would benefit owners of FTT equally and in direct proportion to their FTT holdings. According to the SEC’s lawsuit, if trading on the FTX network becomes more popular, demand for the FTT token may rise. 

The significant token distribution to FTX spurred the leadership team to explore strategies to promote user involvement on the trading platform, increasing competition for and raising the trading price of the FTT token.

The SEC stated in a lawsuit filed against Caroline Ellison, the former CEO of Alameda Research, and Gary Wang, a co-founder of FTX, that FTX will use the proceeds from the token sale to support the creation, promotion, maintenance, and expansion of FTX while emphasizing that FTT is an “investment” with profit potential. 

The FTT documents made it clear that the efforts of FTX’s core management team will fuel the company’s growth and eventual success. 

According to an SEC news release, Ellison and Wang have both acknowledged culpability to the numerous charges leveled against them and do not contest the SEC’s assertions.

Furthermore, the Justice Department and the Commodity Futures Trading Commission (CFTC) are also investigating the two for their behavior at FTX and Alameda. According to the SEC, FTT investors had a reasonable expectation of benefiting from FTX’s efforts to use investor funds to build a purpose for FTT and generate demand and value to their joint venture.