SEC Hits TradeStation Crypto with $1.5 Million Penalty


The Securities and Exchange Commission (SEC) has
charged TradeStation Crypto, Inc., a Florida-based company, for failing to
register the offer and sale of a crypto lending product. TradeStation Crypto has
agreed to pay a penalty of $1.5 million to settle the charges concerning this interest-earning feature on crypto asset accounts.

TradeStation Crypto began offering the crypto lending
product with an interest-earning feature around August 2020. Promoted as a way for
investors to earn interest, investors could deposit or purchase crypto assets
in a TradeStation Crypto account in exchange for the company’s promise to pay
interest.

According to the statement by the SEC, TradeStation Crypto offered and
sold 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’s
Division of Enforcement, mentioned: “The SEC charged TradeStation Crypto with
failure to register its crypto lending product before offering it to investors.
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.”

TradeStation Crypto, without admitting or denying the
findings, 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 similar
charges by state regulatory authorities.

Settlement and Regulatory Actions

Similarly, in a separate statement, the North American
Securities Administrators Association (NASAA) announced the settlement of $1.5
million against TradeStation Crypto, Inc. regarding its crypto interest-earning
program.

The NASAA accused TradeStation Crypto of
offering a crypto interest-earning program allowing investors to passively earn interest
on crypto assets by loaning them to TradeStation Crypto. However,
TradeStation Crypto allegedly failed to comply with state registration requirements
and did not provide investors with necessary information and disclosures about
potential risks.

State securities regulators from California and
Washington, along with a multistate task force comprising Alabama, Mississippi,
North Carolina, Ohio, South Carolina, and Wisconsin, conducted an extensive
investigation into TradeStation Crypto’s crypto interest-earning program.

The investigation, led by NASAA’s Enforcement
Section Committee, uncovered violations of state registration requirements and
inadequate disclosures to investors by TradeStation Crypto.

Each participating state will receive a portion of
the fine, and TradeStation Crypto has been ordered to cease offering its crypto interest-earning
program until it complies with state and federal securities laws. Additionally,
TradeStation Crypto has reportedly reimbursed investors, including interest and earnings.

The Securities and Exchange Commission (SEC) has
charged TradeStation Crypto, Inc., a Florida-based company, for failing to
register the offer and sale of a crypto lending product. TradeStation Crypto has
agreed to pay a penalty of $1.5 million to settle the charges concerning this interest-earning feature on crypto asset accounts.

TradeStation Crypto began offering the crypto lending
product with an interest-earning feature around August 2020. Promoted as a way for
investors to earn interest, investors could deposit or purchase crypto assets
in a TradeStation Crypto account in exchange for the company’s promise to pay
interest.

According to the statement by the SEC, TradeStation Crypto offered and
sold 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’s
Division of Enforcement, mentioned: “The SEC charged TradeStation Crypto with
failure to register its crypto lending product before offering it to investors.
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.”

TradeStation Crypto, without admitting or denying the
findings, 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 similar
charges by state regulatory authorities.

Settlement and Regulatory Actions

Similarly, in a separate statement, the North American
Securities Administrators Association (NASAA) announced the settlement of $1.5
million against TradeStation Crypto, Inc. regarding its crypto interest-earning
program.

The NASAA accused TradeStation Crypto of
offering a crypto interest-earning program allowing investors to passively earn interest
on crypto assets by loaning them to TradeStation Crypto. However,
TradeStation Crypto allegedly failed to comply with state registration requirements
and did not provide investors with necessary information and disclosures about
potential risks.

State securities regulators from California and
Washington, along with a multistate task force comprising Alabama, Mississippi,
North Carolina, Ohio, South Carolina, and Wisconsin, conducted an extensive
investigation into TradeStation Crypto’s crypto interest-earning program.

The investigation, led by NASAA’s Enforcement
Section Committee, uncovered violations of state registration requirements and
inadequate disclosures to investors by TradeStation Crypto.

Each participating state will receive a portion of
the fine, and TradeStation Crypto has been ordered to cease offering its crypto interest-earning
program until it complies with state and federal securities laws. Additionally,
TradeStation Crypto has reportedly reimbursed investors, including interest and earnings.



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