FTX, which is a cryptocurrency platform has recently announced that it will delist the assets which can be possibly considered securities from its American subsidiary platform FTX.US. The move was taken by the FTX when the Texas state regulators filed an investigation against the cryptocurrency organization this October.
How delisting some currencies can help FTX?
The company along with its legal team will work on the prospects of which currencies to be aligned as secured currencies and which currencies to plot as unsecured currencies in the future platform update. The process of this filtration has to be effectively done by the company, this is the reason given by the company to delist some groups of cryptocurrencies from the platform.
The tech company has also been under the radar of US regulators for some speculative translation from the accounts of the company founder, Sam bankman. The company has been dealing with this case, in parallel prospects and to prove these transactions were not unlawful the company has to come up with some robot proofs. In this manner, the delisting of some currencies and working on analyzing these delisted currencies will help the company to get the best positive outcomes for the company and a better future for tech companies against the US regulations on cryptocurrency.
Who is Sam Bankman-Fried?
Sam bankman is the founder and the CEO of FTX. The FTX is Bahamas headquartered cryptocurrency exchange and a facilitator company. The company also allows trade as the part of sale, purchase, and arbitrage of cryptocurrency.
What is the Howey Test?
As per the interpretations from the US supreme court cases, if a transaction is qualified as a contract it is an investment into something under that transaction. Then these transactions are considered investment contracts. If a transaction of any entity fulfills these conditions then these transactions which are considered investment contracts are called securities. These securities are considered the base of those transactions. All the intrinsic values and the future rise or fall of the transactions concerning these securities will result in an impact on these securities.
Cryptocurrencies such as bitcoin and Ethereum do not pass the Howey test as the value that it has generated over time is not delivered by some identical individual or an organization. These cryptocurrency projects were not started to raise money by an individual or company. Hence they are not considered securities in the monetary definitions. The FTX platform will be fighting in near future with the US regulators for pointing out that all cryptocurrencies listed on their platforms are not securities.