Business ProfileforTradeStation Securities, Inc.

As of February 7, 2024

SEC Charges TradeStation Crypto for Unregistered Offer and Sale of Crypto Asset Lending Product
Florida-based company agrees to settle charge concerning interest feature on crypto asset accounts

FOR IMMEDIATE RELEASE
2024-16

Washington D.C., Feb. 7, 2024 —

The Securities and Exchange Commission announced charges against TradeStation Crypto, Inc., based in Plantation, Florida, for failing to register the offer and sale of a crypto lending product that allowed U.S. investors to deposit or purchase crypto assets in a TradeStation account in exchange for the company’s promise to pay interest. To settle the SEC’s charges, TradeStation agreed to pay a $1.5 million penalty.

According to the SEC’s order, TradeStation began to offer and sell the crypto lending product with the interest feature around August 2020. TradeStation marketed the interest feature as a way for investors to earn interest and “Put your crypto assets to work for you,” and TradeStation had complete discretion over how to deploy the assets to generate revenue to pay interest to investors. The order finds TradeStation offered and sold the crypto lending product with the interest feature as a security, and, since it did not qualify for a registration exemption, TradeStation was required to register its offer and sale but failed to do so.

According to the SEC’s order, on June 30, 2022, TradeStation voluntarily stopped offering and selling the interest feature to investors. TradeStation announced earlier this year that it intends to terminate all its crypto-related products and services in the U.S. market on February 22, 2024.

Without admitting or denying the SEC’s findings, in addition to the civil penalty, TradeStation agreed to a cease-and-desist order prohibiting it from violating the registration provisions of the Securities Act of 1933. In parallel actions announced today, TradeStation agreed to pay an additional $1.5 million in fines to settle similar charges by state regulatory authorities.

LINK: https://www.sec.gov/news/press-release/2024-16?utm_medium=email&utm_source=govdelivery

As of July 27, 2022:

The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against TradeStation Securities, Inc. (“Respondent” or “TradeStation”).

These proceedings arise out of TradeStation’s failure to adequately develop and implement a written Identity Theft Prevention Program as required by Rule 201 of Regulation S-ID (17 C.F.R. § 248.201).

Respondent willfully violated Rule 201 of Regulation S-ID (17 C.F.R. § 248.201), which requires registered broker-dealers that offer or maintain covered accounts to develop and implement a written Identity Theft Prevention Program that is designed to detect, prevent, and mitigate identity theft in connection with the opening of a covered account or any existing covered account.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a
Cease-and-Desist Order (“Order”), as set forth below:

Respondent must cease and desist from committing or causing any violations and any future violations of Rule 201 of Regulation S-ID (17 C.F.R. § 248.201).

Respondent is censured.

Respondent shall, within 30 days of the entry of this Order, pay a civil money penalty in the amount of $425,000.00 to the Securities and Exchange Commission.

LINK: https://www.sec.gov/litigation/admin/2022/34-95369.pdf?utm_medium=email&utm_source=govdelivery