Feb 08, 2024 12:25
The Securities and Exchange Commission (SEC) hascharged TradeStation Crypto, Inc., a Florida-based company, for failing toregister the offer and sale of a crypto lending product. TradeStation Crypto hasagreed to pay a penalty of $1.5 million to settle the charges concerning this interest-earning feature on crypto asset accounts.
TradeStation Crypto's Lending Product
TradeStation Crypto began offering the crypto lendingproduct with an interest-earning feature around August 2020. Promoted as a way forinvestors to earn interest, investors could deposit or purchase crypto assetsin a TradeStation Crypto account in exchange for the company's promise to payinterest.
According to the statement by the SEC, TradeStation Crypto offered andsold the crypto lending product as a security but failed to register it.Despite voluntarily stopping the product on June 30, 2022,TradeStation faces penalties.
Stacy Bogert, the Associate Director of the SEC'sDivision of Enforcement, mentioned: "The SEC charged TradeStation Crypto withfailure to register its crypto lending product before offering it to investors.This case highlights the importance of ensuring that investors benefit from thedisclosure requirements provided by the federal securities laws, regardless ofthe label applied to the offering."
TradeStation Crypto, without admitting or denying thefindings, agreed to a cease-and-desist order and a $1.5 million civil penalty.Additionally, TradeStation Crypto will pay an extra $1.5 million to settle similarcharges by state regulatory authorities.
Settlement and Regulatory Actions
Similarly, in a separate statement, the North AmericanSecurities Administrators Association (NASAA) announced the settlement of $1.5million against TradeStation Crypto, Inc. regarding its crypto interest-earningprogram.
The NASAA accused TradeStation Crypto ofoffering a crypto interest-earning program allowing investors to passively earn intereston crypto assets by loaning them to TradeStation Crypto. However,TradeStation Crypto allegedly failed to comply with state registration requirementsand did not provide investors with necessary information and disclosures aboutpotential risks.
State securities regulators from California andWashington, along with a multistate task force comprising Alabama, Mississippi,North Carolina, Ohio, South Carolina, and Wisconsin, conducted an extensiveinvestigation into TradeStation Crypto's crypto interest-earning program.
The investigation, led by NASAA's EnforcementSection Committee, uncovered violations of state registration requirements andinadequate disclosures to investors by TradeStation Crypto.
Each participating state will receive a portion ofthe fine, and TradeStation Crypto has been ordered to cease offering its crypto interest-earningprogram until it complies with state and federal securities laws. Additionally,TradeStation Crypto has reportedly reimbursed investors, including interest and earnings.
This article was written by Jared Kirui at www.financemagnates.com.
World Crypto Global
