FINRA Censures Firm for Misleading Communications on Crypto

A firm settled FINRA charges for misleading communications concerning crypto assets offered by an unaffiliated entity.

According to the AWC, on its webpage, marketing emails, and mobile app promotions, the firm failed to clearly disclose that the crypto assets were offered by an unaffiliated entity, which was not a registered broker-dealer or a member of FINRA or SIPC. FINRA identified one email announcing the launch of the firm’s mobile application that included the claim it was "the only place where kids can choose from over 30 cryptocurrencies or redeem [the firm’s] gift cards from both crypto and stock." FINRA said the email failed to distinguish between the firm’s products and those offered by the unaffiliated entity. FINRA also determined that the firm’s website promoted gift cards for investing in "stocks or crypto," which could have confused investors about which entity was providing the services and what regulatory protections applied. FINRA also stated that some communications highlighted the benefits of crypto assets without adequately disclosing the risks.

FINRA determined the firm violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 2210 ("Communications with the Public"). 

To resolve the matter, the firm agreed to (i) a censure and (ii) a $50,000 fine.