TradeStation Crypto, Inc. settles with the SEC and state regulators, agrees to pay $3 million in penalties

Quick Take

  • The SEC said TradeStation broke securities laws when offering its interest-earning crypto deposit accounts.

The Securities and Exchange Commission charged Florida-based TradeStation Crypto, Inc., for failing to register the offer and sale of a crypto lending product that promised investors a way to earn interest. 

The agency announced that charge on Wednesday and said TradeStation had agreed to settle the charges and pay a $1.5 million penalty without admitting or denying the SEC's findings, according to a statement.

TradeStation is a mainstream finance platform founded in 1982 and acquired by the Japanese finance group Monex in 2011. In 2020, it started offering cryptocurrency deposit accounts allowing customers to earn interest. As of 2021, TradeStation had 11,122 active users participating in the interest feature globally, according to the filing

The SEC said TradeStation’s crypto lending product was a security and did not qualify for a registration exemption. On June 30, 2022, TradeStation stopped offering the service upon the SEC’s order, the agency said. Earlier this year, TradeStation announced its crypto-related products and services in the U.S. would be terminated on Feb. 22. The firm did not admit any wrongdoing.

“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,” Stacy Bogert, associate director of the SEC’s division of enforcement, said in a statement.

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States' role

In a parallel action announced on Wednesday, TradeStation agreed to pay another $1.5 million to settle an investigation of its crypto products by the North American Securities Administrators Association (NASAA), a group of state securities regulators. 

A task force of eight state securities regulators were involved in investigating TradeStation's crypto interest-earning program over the past year, according to a statement from NASAA

“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,” said Elizabeth Harris, chief of New Jersey’s Bureau of Securities in a statement on Wednesday.


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About Author

Anna is a senior policy reporter at The Block. She has a background in political journalism and covered Russian civil society for a range of news outlets in Moscow, including the award-winning newspaper Novaya Gazeta. Before joining The Block, Anna spent the past five years investigating cryptocurrency policies and adoption around the world at CoinDesk. Anna owns bitcoin and a gift NFT of sentimental value.

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