The state of Texas is exploring allegations of unregistered securities offering of FTX US and its billionaire founder.

The Texas State Securities Board (SBB), and the Texas Department of Banking launched an investigation into FTX US and individuals involved, including its CEO Sam Bankman-Fried.

According to the state’s supplemental declaration, the latest Voyager Digital case has raised doubts about whether the firm is offering unregistered securities to US citizens.

FTX US Falls into the Gray Zone

Joining the SBB, the Office of the Texas Attorney General submitted on the same day an objection to the auction of Voyager Digital.

The investigative report notes that Voyager Digital and FTX are violating Texas’ securities laws and that, “the proposed sale, or order approving the sale, attempts to limit the Debtors’ liability for unlawful […] conduct for which state-regulatory fines and penalties may apply.”

In other words, Voyager’s money transmissions are derived from unlawful conduct as the state is aware that it has not been registered in securities offering capacity in Texas.

No Clear Path

Joseph Rotunda, Texas State Securities Board, stated in the filing that he was able to download the FTX Trading using his address in Texas and his own information and was able to generate yield on the app. FTX Trading is not a registered business in the United States, unlike FTX US app.

Rotunda stated that the crypto exchange has offered to grant investors a return on their investments in exchange of their crypto investments into the company.

In fact, a number of other states, apart from Texas, is probing into Voyager and similar service providers. Authorities, including those in the US Securities and Exchange Commission (SEC) contend that selling unregistered securities is illegal conduct that lacks transparency and also poses potential risks to investors.

The question now is whether or not FTX has broken any of the applicable laws, as the filing reported.

At the time of writing, FTX has not published any comments or showed reactions in relation to this incident. Voyager is one of the companies that has made a commitment to reward investors in exchange for the cryptocurrency that they have deposited into the platform.

In addition to the moniker Voyager, another company called Celsius is also involved in a probe linked to marketing unregistered stocks to customers.

A Rough Market

Voyager Digital is amongst the troubled lending platforms under heavy influence of the market downturn and financial crisis. In July, the broker filed for bankruptcy protection.

At this time, the United States Bankruptcy Court for the Southern District of New York is considering the company’s petition for bankruptcy.

Gary Wang, who is also the co-founder and chief technology officer of FTX, and Nishad Singh, who is the director of engineering for FTX, are both referenced in the declaration. The investigation of the Texas securities regulator seems to have no effect on the company’s growth.

Bankman-Fried announced on Oct. 17 that the company has got a license to operate in Dubai. This event made a milestone following successful registration with Dubai’s Virtual Asset Regulatory Authority.

The new adoption will expand the company’s presence. The CEO said that FTX is excited to, “work with regulators who have taken the lead in establishing a regulatory framework for digital assets, protecting customers and allowing for innovation.”

Regulatory Framework For Digital Asset Securities

Coinbase, another company previously investigated by the SEC for allegedly trading unregistered securities, has expressed frustration with the lack of a legal framework for digital asset securities.

Coinbase’s chief legal officer, Paul Grewal, called for an inclusive and transparent regulatory framework in a petition against the accusation.

The discussion surrounding cryptocurrency regulation is heating up around the world, with the United States and the European Union moving swiftly to regulate the sector. However, developing a framework from which everyone may profit is a hard task for legislators.

On the other hand, many industry participants feel that the regulatory approach will stifle cryptocurrency growth.