Crypto Lending Lands TradeStation Crypto in Hot Water With SEC

Sentiment: Neutral

In a recent development in the ever-evolving landscape of the crypto industry, Florida-based TradeStation Crypto has reached a settlement with the U.S. Securities and Exchange Commission (SEC) over charges related to its crypto lending product. The SEC, on Wednesday, revealed that TradeStation failed to register its interest-bearing crypto lending product as a security, a violation of the Securities Act of 1933.

Key Allegations and Settlement Terms

The SEC accused TradeStation of offering a crypto lending product without proper registration, asserting that the product qualified as a security. As a consequence, TradeStation was obligated to register its offer and sale under the Securities Act, a step the company overlooked. To resolve the matter, TradeStation has agreed to pay a substantial $3 million fine, with $1.5 million directed to the SEC and an additional $1.5 million allocated for similar charges from state regulators.

In their official statement, the SEC highlighted:

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.

Voluntary Suspension and Regulatory Focus

Adding complexity to the situation, TradeStation voluntarily ceased offering the interest-bearing feature to investors in 2022. This strategic move underscores the heightened scrutiny from regulatory bodies, especially the SEC, towards crypto offerings that fall within the purview of securities.

TradeStation Crypto, which entered the crypto scene in 2019 with an initial offering of just five digital coins, has expanded its services beyond crypto trading. The firm provides commission-free trading on stocks, ETFs, futures, and options. Despite its relatively smaller profile compared to major crypto exchanges, TradeStation's settlement with the SEC underscores the regulatory reach beyond the industry giants.


As the crypto industry continues to mature, regulatory bodies are intensifying their focus on ensuring compliance. TradeStation Crypto's settlement with the SEC serves as a reminder that even smaller players in the crypto space are subject to regulatory scrutiny, highlighting the imperative for companies to adhere to existing regulations in this dynamic environment.

About the Author

Denis is an avid Crypto and Blockchain Enthusiast. Having founded a crypto marketing company in 2020, and being full time in the space for over 5 years now, Denis is a big believer in the future of web3 and the potential it has to change the world.

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