TradeStation Crypto Settles with SEC and State Regulators for $3 Million
TradeStation Crypto, a subsidiary of Monex Group, has reached a $3 million settlement with the US Securities and Exchange Commission (SEC) and regulators from 26 states. The settlement resolves allegations that TradeStation Crypto offered an unregistered interest-bearing crypto-lending product to investors without the necessary registration.
Unregistered Security
The SEC found that between August 2020 and June 2022, TradeStation Crypto allowed US investors to deposit or purchase crypto assets in exchange for promised interest payments. The firm had sole discretion over the use of these assets to generate revenue for fulfilling its interest obligations. The SEC concluded that the product constituted an unregistered security.
Regulatory Scrutiny on Crypto Lending Products
The investigation leading to this settlement was led by eight states under the coordination of the North American Securities Administrators Association (NASAA). This enforcement action highlights the regulatory scrutiny faced by crypto lending products. It follows similar efforts, such as the closure of Nexo’s interest-bearing product in 2023.
Discontinuing US Operations
TradeStation Crypto has announced that it will cease offering its products and services in the United States by Feb. 24. This decision marks a significant shift in its operational focus. Meanwhile, parent company Monex Group continues to invest in the crypto sector and pursue expansion through acquisitions and planned listings on international stock exchanges.
Monex Group’s Involvement in Cryptocurrency Market
In addition to TradeStation Crypto, Monex Group acquired Japan-based crypto exchange Coincheck after a major security breach and invested in 3iQ Digital Holdings. Monex Group plans to list Coincheck on the US Nasdaq stock exchange through a merger with Thunder Bridge Capital Partners IV, with the listing now scheduled for July 2024.
SEC’s Enforcement Activities
The SEC’s enforcement activities extend beyond the TradeStation Crypto settlement. On Feb. 2, the regulator charged Brian Sewell, the founder of the American Bitcoin Academy, for orchestrating a fraudulent cryptocurrency scheme. Sewell’s operation allegedly deceived students out of approximately $1.2 million by offering educational courses on cryptocurrency investing.
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