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In January 2024, the Financial Industry Regulatory Authority (FINRA) reported a staggering rate of potentially inaccurate and misleading information in broker-dealer crypto asset communications. The Regulator revealed that approximately 70% of communications sampled in their sweep contained “potentially substantial violations” of its rules on communications with the public, including, among other things, “false statements or implications that crypto assets functioned like cash or cash equivalent instruments” and “unclear and misleading explanations of how crypto assets work.”

In November 2022, FINRA launched a targeted exam where it reviewed more than 500 crypto asset-related retail communications for compliance with FINRA Rule 2210, including crypto communications made by a member firm through an affiliate of the member or a third party. Rule 2210, which governs broker-dealer communications with the public, prohibits retail communications from making false, exaggerated, promissory, unwarranted or misleading claims, omitting material information and not providing a sound basis to evaluate any product or service mentioned.  

The potential violations found by FINRA primarily involve making inaccurate, misleading and unbalanced statements and claims regarding crypto assets. Such statements and claims include not clearly distinguishing which crypto assets are offered through the broker-dealer versus an affiliate or third party, making unsubstantiated comparisons of crypto assets with other assets, like stock investments or cash, without a sound basis, and not clearly stating the significant risks associated with trading crypto assets, such as their speculative nature, volatility and lack of regulatory protections. Notably, some communications did not prominently disclose that SIPC protections apply only to certain cash and securities held by a broker-dealer and not to crypto assets that do not qualify as SIPA “securities”. 

The full report and key findings by FINRA can be found here.  


This sweep by FINRA underscores ongoing efforts by regulators to monitor the crypto market as crypto assets become an increasingly mainstream part of broker-dealer product offerings. We advise that broker-dealers review their communications to ensure that they contain sufficient information for an investor to evaluate a crypto asset investment or service and its risks and features. Broker-dealers that offer crypto assets should also review their policies and procedures and compliance trainings on communications with the public to ensure that they align with FINRA’s findings.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.


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Author's Assets


Anthony Tu-Sekine | Partner

As the head of Seward & Kissel’s Blockchain and Cryptocurrency Group and a frequent commentator on all things crypto, Anthony advises clients on a wide range of evolving topics, including how to structure and issue security and utility tokens, registered and unregistered offerings of security tokens, token custody, transfer and liquidity issues, non-security opinions, and investments in crypto assets by funds and other investors. A recognized leader on physical precious metals funds, Anthony represented APMEX Inc. and alternative asset manager Sprott Inc. in connection with the launch of OneGold.com, which allows investors to own gold documented on blockchain. He also:

  • Represents ShelterZoom, a leading blockchain-based SaaS contract management platform;

  • Helped form a tokenized hedge fund;

  • Provides advice in connection with ransomware payments made in cryptocurrencies; and

  • Worked with sponsors of bitcoin ETF and OTC products.

“You can work with regulators or you can really try to piss them off… If you really want to do the latter, then you should expect that they will bring every tool they have against you.”
Anthony’s thoughts on BitMEX indictment, as published in Law360 article “BitMEX Case Seen as Blessing in Disguise for Crypto Sector”

Michael Watling | Partner

Michael Watling is a partner in the Litigation & Investigations Group and co-head of the Government Enforcement and Internal Investigations Practice Group. He represents financial institutions and executives in regulatory enforcement and white-collar matters. Michael is an experienced trial lawyer, having served as both a federal prosecutor in the U.S. Department of Justice (DOJ) Tax Division and as Senior Litigation Counsel in the Enforcement Department of the Financial Industry Regulatory Authority (FINRA). Michael has had significant success representing clients in litigation and during investigations, often resolving matters for clients without any enforcement action and achieving favorable verdicts and settlements once in litigation. Michael also provides compliance advice to a variety of financial services and fintech companies, particularly in areas concerning financial crimes and anti-money laundering compliance.

Anna Katz | Associate

Anna Katz is an associate in the Investment Management Group. She received a J.D. from New York Law School and a B.A. from Brandeis University.