SEC Charges TradeStation Crypto, Inc. Over Unregistered Crypto Lending Product

Florida-based TradeStation Crypto, Inc., has found itself in hot water with the Securities and Exchange Commission (SEC) over its failure to register a crypto lending product promising investors lucrative interest returns.

In an announcement made on Wednesday, the agency disclosed that TradeStation had agreed to settle the charges by paying a hefty $1.5 million penalty, although without admitting or denying the SEC’s findings, as stated in a released statement.

TradeStation, a prominent finance platform established in 1982 and acquired by the Japanese finance group Monex in 2011, expanded its offerings into the cryptocurrency realm in 2020 by introducing cryptocurrency deposit accounts, allowing customers to capitalize on interest earnings. According to filings, as of 2021, TradeStation boasted 11,122 active users globally participating in the interest feature.

However, report has it that the SEC asserted that TradeStation’s crypto lending product constituted a security and therefore failed to meet the registration requirements or qualify for any exemption. Following the SEC’s directive on June 30, 2022, TradeStation ceased offering the service. Additionally, earlier this year, TradeStation announced its impending termination of crypto-related products and services in the U.S., effective February 22, without acknowledging any wrongdoing.

Stacy Bogert, associate director of the SEC’s division of enforcement, underscored the significance of upholding disclosure requirements provided by federal securities laws, irrespective of the offering’s label. Bogert remarked, “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.”

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