NOTE: If this communication should be sent to another contact in your organization, please send the updated contact information to [email protected] and indicate whether this is an additional or replacement contact. Thank you.

FOR IMMEDIATE RELEASE FROM
THE WASHINGTON DEPARTMENT OF FINANCIAL INSTITUTIONS

Wednesday, Feb. 7, 2024
CONTACT:    
Lyn Peters, DFI Director of Communications
PH 360-902-8731, [email protected]

WA DFI PARTICIPATES IN $3 MILLION MULTI-STATE, MULTI-AGENCY SETTLEMENT WITH TRADESTATION CRYPTO, INC.

Washington State Department of Financial Institutions to receive nearly $30,000 in settlement regarding offer and sale of unregistered securities

OLYMPIA – The Washington State Department of Financial Institutions (DFI) joined members of the North American Securities Administrators Association (NASAA) and the Securities and Exchange Commission (SEC) in entering a settlement totaling $3 million with TradeStation Crypto, Inc. (TradeStation). TradeStation is a Florida corporation formed in 2018 that provides crypto-asset-related financial services to retail and institutional customers in the United States. In the settlement, TradeStation agreed to pay a total of up to $1.5 million to state securities regulators, about $29,000 of which has been paid to DFI.

For the past two years, DFI, along with the California Department of Financial Protection and Innovation (CA DFPI), led a task force of state regulators from Alabama, Mississippi, North Carolina, Ohio, South Carolina, and Wisconsin, investigating TradeStation’s possible offer and sale of securities. The investigation revealed that TradeStation offered a crypto interest-earning program to Washington investors, in the form of an interest feature associated with investor digital trading accounts. Under this program, investors passively earned interest on crypto 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 crypto interest-earning program in Washington and the United States at large via its website and various platforms without a license to do so.   

As a result of the investigation, DFI and CA DFPI led the task force negotiations with TradeStation to settle the allegations of the offer and sale of unregistered securities. The eight working group states and 18 additional securities regulators have agreed to the terms of the settlement. More states are expected to follow. DFI and TradeStation entered a consent order adopting the settlement terms on Dec. 21, 2023.

In addition to the monetary settlement, TradeStation agreed to cease and desist from offering, selling, or renewing the interest feature or any security that is not registered, qualified, or exempt, to investors in all NASAA jurisdictions, including Washington.

“Washington DFI is committed to working with our colleagues in other jurisdictions to ensure companies go through the proper process of registering their products,” DFI Director Charlie Clark said. “It’s important for investors to know they are working with licensed entities and that their investments are registered with their state’s securities regulator.”

DFI continues to investigate the offer and sale of interest-bearing cryptocurrency accounts and will consider enforcement actions against firms that offer these accounts without complying with state law.

Firms that need to register and deal with past unregistered activity should reach out to DFI’s Division of Securities, either online at https://dfi.wa.gov/securities or by mail, phone or fax at:

Mailing Address: Department of Financial Institutions Securities Division P.O. Box 41200 Olympia, WA 98504-1200
 Main Telephone: 360-902-8760
Toll Free Telephone: 877-RING DFI (746-4334)
Fax: 360-902-0524
TDD: 360-664-8126

Washington State investors are encouraged to use DFI’s licensee database or contact the Securities Division to verify the registration status of a firm before investing their money.

Recent bankruptcies of a few major companies operating in this space have revealed that consumers holding accounts at these types of companies may be considered unsecured creditors. Investors also should be aware that funds held on cryptocurrency trading platforms are likely not insured by the FDIC. Recently, the FDIC issued a Fact Sheet clarifying when an account is considered FDIC insured.

Tips for Investors:

###

About DFI ▪ www.dfi.wa.gov ▪ 360-902-8700 ▪ 877-RINGDFI (746-4334)
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: www.twitter.com/DFIConsumers ■ https://dfi.wa.gov/financial-education/blog ■ https://www.youtube.com/user/WADFI ■ www.homeownership.wa.gov ■ www.instagram.com/wastatedfi/ ■ www.linkedin.com/company/state-of-washington-department-of-financial-institutions/

About the Division of Securities ▪ www.dfi.wa.gov/sd ▪ 360-902-8760 ▪ 877-746-4334
The Division of Securities regulates securities investments, franchises, business opportunities, and off-exchange commodities sold in Washington and the firms and individuals that sell these products or provide investment advice. The Division handles complaints, conducts investigations, and takes appropriate enforcement actions to protect investors and combat fraud.

This email was sent to [email protected] using GovDelivery Communications Cloud on behalf of: Washington State Department of Financial Institutions · 150 Israel Rd SW  · Tumwater, WA 98501 GovDelivery logo