Author: Mandy Williams
The financial authority found false statements or implications that cryptocurrencies functioned like fiat or equivalent instruments.
The Financial Industry Regulatory Authority (FINRA) in the United States has disclosed in an official report that approximately 70% of retail communications regarding cryptocurrencies breach its regulations against misleading claims. This violation stems from communications that do not offer adequate explanations for assessing digital assets, explicitly omitting details on how these assets are issued, held, transferred, and sold.
FINRA’s investigation, initiated in November 2022, focused on cryptocurrency firms engaging with retail investors about crypto assets and their services to scrutinize their communication practices. This examination involved reviewing over 500 messages sent by its member firms related to assets provided by either affiliates or third parties, ensuring they adhered to FINRA Rule 2210. This rule mandates that all communications must avoid being false, exaggerated, promising, unwarranted, or misleading and should not omit information that could render the message deceptive. It emphasizes that all broker-dealer communications with the public must be equitable and balanced. Furthermore, FINRA identified a prevalent issue where communications did not adequately distinguish between crypto products and services offered by an affiliate versus those offered by the member firm itself, with a significant portion of these communications not aligning with the standards set by FINRA Rule 2210.
FINRA News and Information compiled by Costello Law Group, Securities Fraud Lawyers