Arkansas Securities Department joins $1.5 million multistate securities settlement against crypto platform, TradeStation
Little Rock, Ark. (February 7, 2024) – The Arkansas Securities Department (ASD) has joined a multistate settlement with TradeStation Crypto Inc. (TradeStation), to resolve the ASD’s investigation into TradeStation’s cryptocurrency interest-earning program.
TradeStation is a Florida-based corporation that provides cryptocurrency-asset-related financial services to retail and institutional customers in the United States, including investing and trading services. From August 2020 to June 2022, TradeStation offered a cryptocurrency interest-earning program to Arkansas investors. Under this program, investors passively earned interest on cryptocurrency 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 cryptocurrency interest-earning program in Arkansas and the United States at large through its website and various platforms.
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 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 unregistered offer and sale of securities via its cryptocurrency interest-earning program.
In Arkansas alone, there were 85 active Arkansas investor digital asset trading accounts collectively valued at over $92,544.76. Under the terms of the settlement, TradeStation will pay a fine of $29,411.76 to the ASD.
“TradeStation is yet another example of a financial services company offering unregulated services for crypto assets that are not in compliance with Arkansas’s securities laws,” said ASD Commissioner Susannah T. Marshall. “The ASD’s continued participation in multistate actions against crypto trading platforms shows our commitment to ensuring that Arkansas investors are protected by our state’s securities laws when choosing investments involving digital assets and services.”
The ASD has previously warned Arkansans of rising concerns over the proliferation of decentralized and digital asset-based financial products and services targeting retail investors. Many of these products and services are like traditional financial services offered by banks and brokerages but without any of the regulatory safeguards provided by registered firms and products. This multistate settlement is also part of a larger multistate effort to investigate companies that offer cryptocurrency interest accounts and hold them accountable when they have violated the law, like the ASD’s March 2022 action against BlockFi Lending LLC, and its February 2023 action against Nexo Capital Inc.
