Tradestation Crypto, Inc., a Florida-based cryptocurrency trading platform, has agreed to pay a total of $3 million in penalties to resolve allegations by the SEC and a consortium of state regulators. The charges accused Tradestation of offering and selling an unregistered crypto asset lending product that promised investors interest earnings on their deposits, an SEC press release revealed on Wednesday.
The SECâs investigation found that from August 2020 to June 2022, Tradestation Crypto marketed a crypto lending product that enabled U.S. investors to deposit or purchase crypto assets in exchange for the companyâs promise to pay interest. However, the agency determined that Tradestation failed to register the offer and sale of this product, which it deemed a security, thereby violating federal securities laws.
To resolve the SECâs charges, Tradestation has agreed to pay a $1.5 million penalty without admitting or denying the SECâs findings. Furthermore, the company consented to a cease-and-desist order prohibiting future violations of the registration provisions of the Securities Act of 1933.
Parallel to the SEC settlement, Tradestation also agreed to pay an additional $1.5 million to settle similar charges by state regulatory authorities coordinated through the North American Securities Administrators Association (NASAA).
Tradestation Cryptoâs decision to offer and sell the unregistered product came to a halt on Jun. 30, 2022, when the company voluntarily ceased its crypto lending program. Additionally, earlier this year, Tradestation announced plans to terminate all its crypto-related products and services in the U.S. by Feb. 22, further distancing itself from the practices that led to the regulatory scrutiny.
This case showcases the ongoing challenges and regulatory focus in the United States. The SEC and state regulators continue to emphasize the importance of compliance with securities laws to protect investors from potential risks associated with crypto asset investments.
The settlement also reflects the broader trend of regulatory agencies taking decisive actions against firms in the crypto space that fail to adhere to securities laws.
Tradestation Crypto is a subsidiary of Monex Group, a Japanese finance entity that has shown a keen interest in the cryptocurrency sector, including plans to list its Coincheck cryptocurrency exchange in the U.S. Nasdaq stock exchange. The settlement is an important moment for Tradestation and serves as a cautionary tale for other crypto firms considering entering the U.S. market.
