April 19, 2024
Latest Cryptocurrency News

TradeStation Crypto Faces Regulatory Charges, Settles for $3 Million in Penalties to SEC and NASAA

Florida-based TradeStation Crypto, Inc. has agreed to pay a total of $3 million in penalties to settle charges filed by the U.S. Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA). The SEC charged the company for failing to register the offer and sale of a crypto lending product, while NASAA investigated its crypto-related products.

The SEC announced the charges on Wednesday, revealing that TradeStation Crypto had promised investors a way to earn interest through its crypto lending product without properly registering it. In response, TradeStation has agreed to settle the charges by paying a $1.5 million penalty, all without admitting or denying the SEC’s findings, according to an official statement.

TradeStation, a mainstream finance platform founded in 1982 and acquired by the Japanese finance group Monex in 2011, ventured into the cryptocurrency space in 2020 by offering cryptocurrency deposit accounts. As of 2021, the platform had 11,122 active users participating in the interest feature globally.

The SEC deemed TradeStation’s crypto lending product as a security, asserting that it did not qualify for a registration exemption. On June 30, 2022, TradeStation halted the service following the SEC’s order. Earlier this year, the company announced the termination of its crypto-related products and services in the U.S., effective Feb. 22, 2024. The termination, however, does not imply an admission of wrongdoing.

Stacy Bogert, associate director of the SEC’s division of enforcement, emphasized the significance of ensuring investor protection and disclosure requirements under federal securities laws. “This case highlights the importance of ensuring that investors benefit from the disclosure requirements provided by the federal securities laws, regardless of the label applied to the offering,” Bogert stated in a press release.

In a parallel action also announced on Wednesday, TradeStation agreed to pay an additional $1.5 million to settle an investigation conducted by NASAA, a group comprising state securities regulators. A task force of eight state securities regulators had been involved in scrutinizing TradeStation’s crypto interest-earning program over the past year, according to a statement from NASAA.

Elizabeth Harris, chief of New Jersey’s Bureau of Securities, commented on the importance of due diligence in crypto investments. “While we understand that investing in crypto asset securities may be alluring, investors must take the time to investigate a cryptocurrency-related investment before they hand over their money,” Harris emphasized in a statement on Wednesday.

TradeStation Crypto’s settlement with both the SEC and NASAA serves as a reminder of the regulatory scrutiny faced by companies operating in the cryptocurrency space and the importance of compliance with existing securities laws.

Image by storyset on Freepik

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