The Securities and Exchange Commission (SEC) has filed another enforcement action targeting a digital asset firm. The SEC has filed charges against TradeStation Crypto, alleging an unregistered offering of a “crypto asset lending product.”
TradeStation Crypto has settled the charges without admitting or denying the charges. The company has paid a $1.5 million penalty to make the issue go away while agreeing to a cease-and-desist order prohibiting it from future similar violations. TradeStation Crypto, based in Florida, has also paid state regulators a $1.5 million penalty. The company voluntarily agreed to stop offering the product to investors in June 2022 and decided to halt all spot crypto services in the market as of February 22, 2024. The company has waived all fees for crypto withdrawals.
The SEC claimed that TradeStation started offering a crypto lending product in 2020, promoting it as a way to earn income or put your crypto to work. The SEC alleged that TradeStation offered a digital asset interest product that was a security.
Stacy Bogert, Associate Director of the SEC’s Division of Enforcement, said the case “highlights the importance of ensuring that investors benefit from the disclosure requirements” as required by federal securities laws.
TradeStation Group, Inc. also offers more traditional investment services. The company recently won a Best Brokerage App award presented by Benzinga.
On the TradeStation website, the company explained why it was exiting support for crypto:
“In the rapidly evolving crypto industry, the regulatory environment for spot cryptocurrency trading in the U.S. remains uncertain. We believe the recent introduction of 11 new spot bitcoin ETFs that are now available on regulated securities exchanges, together with existing crypto-related products already available on securities and futures exchanges, and additional ones we think are likely to be continuously launched in the future, provide a clearer path forward for investors who are interested in the cryptocurrency markets. Our affiliate, TradeStation Securities, intends to continue to support offerings of listed futures, stocks, exchange-traded products (such as ETFs and ETNs) and stock options in tradeable crypto-related instruments on regulated securities and futures exchanges.”