FTT is one of the top 10 securities! Key points summarizing SEC's civil charges against FTX executives

Following the criminal charges filed by the U.S. Southern District of New York against Caroline Ellison, former CEO of Alameda Research, and Gary Wang, co-founder and CTO of FTX, the SEC has also revealed civil charges against the two. In addition to citing various illegal activities by the two individuals, the SEC has presented multiple pieces of evidence to demonstrate that FTT is considered a "security."

SEC Charges FTX Executives with Multiple Offenses

According to a civil complaint filed by the SEC in the Southern District of New York against Caroline Ellison, former CEO of Alameda Research, and Gary Wang, co-founder and CTO of FTX, the SEC has brought multiple charges against them. The allegations include:

1. Gary illicitly transferred FTX user funds to Alameda. Caroline, who managed Alameda, misappropriated user funds for Alameda's trading activities.

2. With Caroline's knowledge and consent, risk mitigation measures for Alameda were lifted, and special treatment was provided to Alameda on FTX, including almost unlimited credit lines, funded by FTX user funds.

3. Under SBF's guidance, Caroline borrowed billions of dollars for Alameda from third-party lenders, with much of the loans collateralized by FTT. Caroline automatically purchased FTT on various platforms to drive up prices, thereby increasing collateral value and enabling Alameda to borrow more money from external lenders, while also increasing risks for FTX investors, users, and Alameda's lenders.

4. When the cryptocurrency market crashed in May this year, Alameda's lenders demanded repayment of billions of dollars in loans. At that time, even though Alameda had already taken billions of dollars of FTX user assets, it was unable to fulfill its loan obligations. Caroline continued to transfer billions of dollars of FTX user assets to Alameda under SBF's instructions to ensure Alameda could maintain its loan relationships and keep funds flowing from lenders and other investors.

Top 10 Evidences that FTT is a Security

In addition to charging the two individuals with crimes, the SEC explicitly stated in the same document that FTT qualifies as a "security" because FTT investors have a reasonable expectation of profit from various actions of FTX. The evidence presented by the SEC includes:

1. An increase in demand for FTT may result from an increase in trading demand on FTX, thus causing FTT price increases that equally benefit FTT holders in proportion to their FTT holdings.

2. Information on the FTT whitepaper and FTX website describes FTT as a "token that powers the FTX ecosystem." This public messaging leads FTT holders to have a reasonable expectation of profit from FTX's growth, future earnings, and price appreciation of FTT.

3. The FTT whitepaper specifically highlights the profit potential of FTT. For example, "We launched FTX in April, which already has the best order book in the world, and our goal is to make as much money as Bitmex and OKEx within a year."

4. The FTX website also mentions that if FTT purchasers pre-fund their FTX wallets to buy FTT in the first three days of the IEO, they will receive a 5% token bonus, providing potential immediate profits for investors. It also states that FTT will be listed at a price of 1.00 USD on July 29, 2019, with a "presale" price range between 0.10 USD and 0.80 USD, clearly offering potential immediate profit for buyers upon listing.

5. FTX's "buy and burn" program, which involves the regular repurchase and burning of FTT, leads investors to expect profits.

6. The FTT whitepaper mentions that holding a certain amount of FTT for a specified period can reduce contract fees, thus boosting demand for FTT.

7. The FTT whitepaper refers to the FTX team as an "all-star team," emphasizing the importance of the management team's experience and success in developing cryptocurrency trading systems to encourage users to believe in the platform's success and purchase FTT.

8. FTX markets FTT as an asset usable in "yield programs" or "staking programs."

9. The FTX whitepaper links the prospects of FTT investors with FTX's growth and states that FTX will employ various strategies to "acquire users and increase trading volume," including hiring influential spokespersons.

10. FTX states in the whitepaper: "As we add more products and features to FTX, FTT will have multiple uses. For example, when we launch spot trading on FTX in the future, FTT will be used during token IEOs."

Based on the above reasons, the SEC has charged Gary Wang and Caroline Ellison with violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, and both individuals have pleaded guilty to various charges and are cooperating with ongoing SEC investigations.

Additionally, according to previous reports, the U.S. Attorney's Office for the Southern District of New York has brought criminal charges against the two individuals, with each facing a maximum of 50 and 110 years in prison, respectively.