SEC Files Settled Charges Against TradeStation Over Unregistered Crypto Lending Product

SEC Charges TradeStation Crypto for Unregistered Offer and Sale of Crypto Asset Lending Product

The Securities and Exchange Commission today announced charges against TradeStation Crypto, Inc., based in Plantation, Florida, for failing to register the offer and sale of a crypto lending product that allowed U.S. investors to deposit or purchase crypto assets in a TradeStation account in exchange for the company’s promise to pay interest. To settle the SEC’s charges, TradeStation agreed to pay a $1.5 million penalty.

According to the SEC’s order, TradeStation began to offer and sell the crypto lending product with the interest feature around August 2020. TradeStation marketed the interest feature as a way for investors to earn interest and “Put your crypto assets to work for you,” and TradeStation had complete discretion over how to deploy the assets to generate revenue to pay interest to investors. The order finds 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.

AI Disclosures to SEC Jump as Agency Warns of Misleading Claims

Allstate Corp., Starbucks Corp., and other major companies are talking more about artificial intelligence in disclosures to investors—and securities regulators are paying close attention.

Just over 40% of S&P 500 companies mentioned AI in their most recent annual report with the Securities and Exchange Commission, according to Bloomberg Law’s review of the disclosures. That continues an upward trend since 2018, when AI was mentioned only sporadically.

FINRA Enforcement Authority Turns on Looming Appeals Court Fight

Wall Street’s self-regulator will defend its ability to conduct enforcement activities before a US appeals court Thursday in a case it’s calling an existential threat.

Alpine Securities Corp. says the Financial Industry Regulatory Authority acts as a governmental entity and violates constitutional provisions that are applicable to it when it takes on an enforcement role. And if FINRA isn’t a state actor, it shouldn’t be enforcing federal law, Alpine said in a briefing.

“This suit poses an existential threat not only to FINRA, but also to Congress’s time-tested approach of using private entities to assist in fulfilling important regulatory responsibilities and public functions—an approach that dates to the Founding,” FINRA said in an October brief.

NBA Sued Over Deal With Failed Crypto Exchange Voyager

The National Basketball Association was hit with a lawsuit over its marketing links to failed crypto exchange Voyager Digital Holdings Inc., which investors claim led to $4.2 billion in losses.

The NBA was “grossly negligent” in agreeing to a marketing deal between Voyager and Mark Cuban, the former owner of the NBA’s Dallas Mavericks, the investors alleged in a suit filed Tuesday in Miami. The investors previously sued Cuban for promoting the exchange, which they called “an unregulated and unsustainable fraud” after its collapse in 2022.

Some advice so the SEC doesn’t get caught with its crypto pants down

The Securities and Exchange Commission (SEC) needs people with the expertise to oversee so-called crypto assets like bitcoin. The Government Accountability Office (GAO) found that the SEC needs to update its workforce planning strategy in order to ensure it has the crypto experts it needs. For more, the Federal Drive with Tom Temin spoke with GAO’s Director of Financial Markets and Community Investment, Michael Clements.

”Ask a Recruiter”: When is the Right Time to Make a Lateral Partner Move?

Lawyers make lateral moves for two main reasons and you won’t be surprised to hear that they both center on compensation. #1: There’s a hot market for their expertise. When this is the case, a move often results in a significant one-time bump in comp and/or a title change. This is true at all levels, from associate to rainmaking senior partner. #2: A move could bolster their long-term profitability….

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Are law firms seeking to add laterals with securities expertise in 2024? You bet. As I mentioned in a previous column geared toward those of you in government, based on recent talks my colleagues and I have had with law firms and Macrae’s market research, the most in-demand expertise includes general securities enforcement; asset management with a particular focus on the private fund adviser rules; FCPA; cyber and crypto; and corporate disclosure counsel. While I work primarily with partners and tend to focus my columns accordingly, this applies to a large extent across the board. For instance, there is significant market demand for senior associates with SEC enforcement experience.

I’ll close with a question potential candidates tend to ask me right out of the gate: “Do I need to have a portable book of business?….