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Unregistered Crypto Lending Product Draws Regulatory Ire

TradeStation Crypto, part of the Monex Group from Japan, found itself in hot water with the SEC and regulators from 26 states over its crypto-lending product. The Florida-based subsidiary allegedly allowed investors to earn interest on deposited or purchased crypto assets without proper registration—a move that caught the attention of regulators.

Details of the Settlement

The SEC’s investigation pinpointed the period between August 2020 and June 2022 as the time when TradeStation Crypto engaged in offering the contentious product. While the firm did not admit to or deny the findings, it agreed to the $3 million settlement to resolve the matter. Notably, this decision aligns with similar enforcement actions taken by the SEC and the North American Securities Administrators Association (NASAA) against other crypto operations.

TradeStation Crypto’s Strategic Shift

Following the settlement, TradeStation Crypto announced a strategic withdrawal of its products and services from the U.S. market by February 24. This decision is part of a broader strategy by Monex Group, which continues to invest and expand in the crypto space, including through acquisitions and planned listings on international stock exchanges.

Monex Group’s Crypto Endeavors

Monex Group’s crypto market involvement extends beyond this incident. After acquiring Coincheck post-security breach, the company has expressed plans to list it on the U.S. Nasdaq stock exchange through a merger, though this has been postponed to July 2024.

SEC’s Ongoing Crypto Crackdown

The SEC is maintaining its vigilant stance on unauthorized cryptocurrency activities. In addition to the TradeStation Crypto case, the SEC recently charged Brian Sewell, founder of the American Bitcoin Academy, for allegedly defrauding students through a cryptocurrency scheme, further emphasizing the regulator’s commitment to protecting investors.

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