On February 6, trading platform TradeStation Crypto reached a settlement with the U.S. Securities and Exchange Commission (SEC) and a coalition of state regulators, agreeing to pay a $3 million fine for failing to register an interest-bearing loan product. The SEC, along with representatives from 26 states, will divide the penalty.
According to the SEC, between August 2020 and June 30, 2022, TradeStation Crypto offered a crypto lending product allowing U.S. investors to deposit or purchase cryptoassets in a TradeStation account in exchange for the company's commitment to pay interest. The SEC determined that TradeStation Crypto had complete discretion over how the assets were utilized to generate income and pay interest to investors, categorizing the product as an unregistered security through a consent order.
TradeStation Crypto neither admitted nor denied the SEC's findings. Concurrently, the North American Securities Administrators Association (NASAA) disclosed that TradeStation Crypto had resolved matters with regulators in 26 states. NASAA President Claire McHenry highlighted the collaborative efforts between state and federal authorities, emphasizing their commitment to safeguarding investors' interests.
A year-long investigation involving eight states, coordinated by NASAA, preceded the settlement. NASAA, in partnership with the SEC, played a pivotal role in halting Nexo's interest-bearing products in 2023. TradeStation Crypto announced its decision to discontinue operations and offerings in the United States effective February 24. The Florida-based TradeStation Crypto operates as a subsidiary of the Monex Group, a Japanese brokerage, asset manager, and cryptocurrency exchange player actively engaged in the digital asset space.
Monex Group expressed interest in acquiring FTX Japan last year and announced plans to list its Japan-based Coincheck cryptocurrency exchange on the U.S. Nasdaq stock exchange in 2022. Originally slated for July 2023, the listing was rescheduled to July 2024. Notably, Monex Group acquired Coincheck in 2018 following a $534 million hacking incident. Leveraging its expertise in launching Bitcoin, Monex Group acquired a controlling stake in Canada's 3iQ Digital Holdings in December, venturing into Ethereum Canadian Spot ETFs.
