Feb 7, 2024 - Economy

TradeStation to shut down crypto products in the U.S.

Illustration of a hand inserting a coin into a piggy bank slot in a computer

Illustration: Annelise Capossela/Axios

The U.S. Securities and Exchange Commission isn't done cracking down on crypto lending — it announced a $3 million in fines against TradeStation over its lending program today.

Why it matters: Offering customers yield for allowing a third party to lend out their cryptoassets was a popular product in the blockchain business, but then many of the companies offering it fell apart in 2022.

Details: TradeStation has been charged with failure to register a lending product as an investment contract with the agency.

  • It's agreed to $1.5 million in fines to the SEC and another $1.5 million to state regulators.
  • TradeStation will also shut down all crypto offerings in the U.S. as of Feb. 22.
  • The firm did not admit nor deny wrongdoing.

Zoom out: This has been one area where the SEC has recorded a string of wins against the crypto industry.

Flashback: The first major signal that such products would come under scrutiny came in late 2021, when Coinbase backed off from offering its own version following threats by the U.S. securities regulator.

  • In Feb. 2022, crypto lender BlockFi agreed to pay the SEC $100 million over its crypto lending program.
  • Also that month, it issued an investor bulletin on the topic.
  • A little over a year ago, the SEC sued the exchange, Gemini, and the lender, Genesis, over a similar program run as a partnership, called Earn. That's been settled.

By the numbers: According to the SEC's complaint, 11,122 active users opted in to the interest feature, putting up $281 million.

  • The firm shut the interest program down on June 30, 2022.

Background: TradeStation is a trading platform for all kinds of financial products. Headquartered in Florida, it has been running since 1982.

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