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FTX's exchange token FTT was sold as an investment contract and is a "security," the US Securities and Exchange Commission said in a complaint filed on Wednesday, in a move that is sure to have a wide-ranging impact on the industry.
The Securities and Exchange Commission filed a lawsuit against FTX co-founder Gary WANG and former Alameda Research CEO Caroline ELLISON. The complaint highlights that FTX used the proceeds from the token sale to fund the development, marketing, business operations, and growth of FTX, while emphasizing that FTT is an “investment” with potential returns.
The FTT "buy and burn" program was also mentioned. This initiative, used by many other exchange tokens, is akin to share buybacks, where FTX proceeds will buy back and burn FTT, thereby increasing its value. Ellison and Wang have pleaded guilty to various charges and are not contesting the SEC charges, the agency said in a news release.
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