WASHINGTON, D.C. – (February 7, 2024) – The North American Securities Administrators Association (NASAA) today announced that a taskforce of state securities regulators and the United States Securities and Exchange Commission (SEC) have reached a $3 million settlement with TradeStation Crypto, Inc.(TradeStation) concerning its crypto interest-earning program.
In the past year, regulators in California and Washington, coordinated through NASAA’s Enforcement Section Committee, co-led a multistate task force of eight state securities regulators that also includes Alabama, Mississippi, North Carolina, Ohio, South Carolina, and Wisconsin, to conduct a comprehensive investigation into TradeStation’s crypto interest-earning program.
“This joint investigative effort is typical of how state regulators work every day to protect Main Street investors,” said Claire McHenry, NASAA President and Deputy Director of the Nebraska Department of Banking and Finance’s Bureau of Securities. “This settlement also demonstrates the value of state and federal authorities working together to benefit investors nationwide. We appreciate working with our counterparts at the SEC in reaching this settlement.”
TradeStation, a Florida corporation formed in 2018, provides crypto-asset-related financial services to retail and institutional customers in the United States, including investing and trading services. From around August 2020 to June 2022, TradeStation offered a crypto interest-earning program to United States investors. Under this program, investors could passively earn interest on crypto assets by loaning them to TradeStation. TradeStation maintained total discretion over the revenue-generating activities utilized to earn returns for investors. The company offered and promoted their crypto interest-earning program in the United States via its website and various platforms.
TradeStation is alleged to have failed to comply with state registration requirements. As a result, investors were sold unregistered securities in violation of state laws and additionally did not receive information and disclosures necessary to understand the potential risks of TradeStation’s crypto interest-earning program.
For each state participating in the settlement, TradeStation will pay a fine of $29,411.76 and cease offering, selling, or renewing its crypto interest-earning program until such activities are compliant with applicable state and federal securities laws. TradeStation has represented that it repaid investors, including interest and earnings.
NASAA Enforcement Section Committee Co-Chairs Brett Olin, Montana Deputy Securities Commissioner, and Amanda Senn, Alabama Securities Director, commended the state securities regulators for their work in investigating the matter that led to the settlement of this matter. “This enforcement action demonstrates how states work collaboratively to protect the integrity of the financial markets across the country,” said Senn and Olin.
26 NASAA jurisdictions are signatories to the term sheet for the settlement: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, Maine, Minnesota, Mississippi, Montana, New Hampshire, New Jersey, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Washington, and Wisconsin.
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About NASAA:
Organized in 1919, the North American Securities Administrators Association (NASAA) is the oldest international organization devoted to investor protection. NASAA is a voluntary association whose membership consists of the securities regulators in the 50 states, the District of Columbia, Puerto Rico, Guam, the U.S. Virgin Islands, the 13 provincial and territorial securities regulators in Canada, and the securities regulator in México. For more information, visit www.nasaa.org.
For More Information:
Fred Baldassaro, Director of Communications
fbaldassaro@nasaa.org | 202-737-0900
Karen Grajales, Communications and Investor Outreach Manager
kgrajales@nasaa.org | 202-737-0900
