For Immediate Release: February 7, 2024
Wisconsin DFI, States, and SEC Settle with TradeStation for $3 Million Over Crypto Program
MADISON, Wis. – The Wisconsin Department of Financial Institutions (DFI), a taskforce of state securities regulators, and the U.S. Securities and Exchange Commission (SEC) announced today a $3 million
settlement in principle with TradeStation Crypto, Inc. over its unregistered crypto interest earning program. The settlement resolves allegations that TradeStation violated state and federal securities laws by offering and selling securities without proper registration or disclosure to investors.
The settlement stems from a comprehensive investigation led by state securities regulators in Alabama, California Mississippi, North Carolina, Ohio, South Carolina, Washington, and Wisconsin and coordinated under the auspices of the North American Securities Administrators Association (NASAA) Enforcement Section Committee.
“This settlement sends a clear message that crypto-related businesses must comply with state securities laws or face serious consequences,” said DFI Secretary-designee Cheryll Olson-Collins. “The DFI is committed to protecting investors and the integrity of the financial markets from such fraudulent schemes.”
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 and, as a result, investors were sold unregistered securities in violation of state laws and additionally were deprived of critical information and disclosures necessary to understand the potential risks of TradeStation’s crypto interest earning program.
For the states 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 repaid investors, including interest and earnings.
Twenty-six 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.
The DFI urges investors to exercise caution when dealing with crypto-related businesses and to report any suspicious activities to the DFI’s Division of Securities by calling (608) 266-2139. Investors can also visit the DFI’s website to learn more about crypto investing and how to protect themselves from fraud and scams.
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Media Contact Email: DFICommunications@dfi.wisconsin.gov