Florida Firm Agrees to Stop Selling Unregistered Securities
TRENTON – Attorney General Matthew J. Platkin and the Division of Consumer Affairs today announced that the Bureau of Securities entered into a consent order with TradeStation Crypto, Inc. to resolve an investigation into the offer and sale of unregistered securities in connection with its crypto interest-earning program.
The $1.5 million multistate settlement, on behalf of 51 United States jurisdictions, is the result of a North American Securities Administrators Association (NASAA) task force.
TradeStation, a Florida firm, provides digital asset-related financial services to retail and institutional customers in the United States, including investing and trading services. The digital assets for which these services were provided included, but were not limited to, Bitcoin, Ether, Bitcoin Cash, Litecoin, and USD Coin.
“We have regulatory frameworks in place for a reason−to ensure investor protection and market integrity,” said Attorney General Platkin. “Crypto asset securities are not exempt from the same high standards we have for traditional securities, and we will continue to take action against those firms that miss the mark.”
“Unregistered crypto asset securities deprive investors of important protections and disclosures that investors need to make informed decisions,” said Cari Fais, Acting Director of the Division of Consumer Affairs. “With this action and others, states are leading the way in oversight of crypto asset securities, promoting trust and stability in the evolving landscape of digital assets.”
“While we understand that investing in crypto asset securities may be alluring, investors must take the time to investigate a cryptocurrency-related investment before they hand over their money,” said Elizabeth Harris, Bureau Chief of the Bureau of Securities. “Raising public awareness of issues with and risks of cryptocurrency-related securities is a crucial part of the Bureau’s work. An informed investor is the best protection.”
The NASAA task force was made up of eight state securities regulators from Alabama, California, Mississippi, North Carolina, Ohio, South Carolina, Washington, and Wisconsin. The task force determined that during the offering period, TradeStation engaged in the offer and sale of unregistered securities via its crypto interest-earning program. Investors passively earned interest on crypto assets by loaning them to TradeStation, which had total control over the revenue-generating activities used to earn returns.
From approximately August 2021 to June 2022, TradeStation offered the crypto interest-earning program to at least 142 New Jersey investors.
Under the consent order with the Bureau of Securities, TradeStation agreed to pay a civil monetary penalty in the amount of $29,411.76 and to cease and desist from the offer and sale of securities, unless registered or exempt.
The Bureau’s investigation was handled by Deputy Bureau Chief Amy Kopleton and Investigator Delfin Rodriguez of the Bureau of Securities, within the Division of Consumer Affairs.
The Bureau is charged with protecting investors from investment fraud and regulating the securities industry in New Jersey. The Bureau encourages investors to “Check Before You Invest” by obtaining information, including the registration status and disciplinary history, of any financial professional doing business in or from New Jersey. Investors should contact the Bureau toll-free within New Jersey at 1-866-I-Invest (1-866-446-8378) or from outside New Jersey at (973) 504-3600, or by visiting the Bureau’s website at www.NJSecurities.gov. Investors can also contact the Bureau for assistance, or to raise issues or complaints about New Jersey-based financial professionals or investments.