The US Securities and Exchange Commission (SEC) has filed charges against TradeStation Crypto for operating a cryptocurrency lending product without having a proper securities license.
The SEC argues that TradeStation Crypto failed to meet registration exemption requirements, thus exposing it to a hefty fine.
Cryptocurrency TradeStation faces heavy fines
A recent statement reveals that the platform announced to customers that their crypto assets can earn interest. However, it was revealed that the platform retained sole control over the use of these assets to generate income.
“TradeStation marketed the interest feature as a way for investors to earn interest and ‘use your cryptocurrency assets to your advantage,’ and TradeStation had complete discretion over how to deploy the assets to generate revenue to pay interest to investors.”
The SEC fined TradeStation $1.5 million, along with an additional $1.5 million fine imposed by state regulators. However, it is important to note that the settlement agreement does not mean that TradeStation has acknowledged the SEC's findings.
Furthermore, the SEC issued a cease and desist order against TradeStation Crypto.
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However, the company explicitly states on its website that it lacks a license from the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
The Securities and Exchange Commission (SEC) has been cracking down on cryptocurrency companies for offering unregistered securities recently.
Recent legal actions taken by the Securities and Exchange Commission against cryptocurrency companies
In July 2023, the SEC targeted smart contract auditing firm Quantstamp for raising $28 million through an initial coin offering (ICO) of unregistered securities.
In August 2023, the SEC charged Los Angeles-based media and entertainment company Impact Theory with conducting an unregistered offering of crypto-asset securities. The action was the first enforcement action of its kind against NFTs.
BeInCrypto reported that the company enticed investors by promising profits if the company achieved its goal of “building the next Disney.”
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This raises legal concerns, according to the Howey test. This shows that the main features of securities include “expectation of profit” and “efforts of others.”
Affect theory appears to have made such explanations significantly easier through the hype around NFTs.
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