tZERO fined $800k for sharing order information without SEC knowledge

“Whether and how an ATS displays orders and trading interest is fundamental to any ATS’s operations because order display provides buyers and sellers with the expectation of liquidity in the ATS and the potential execution of a participant’s orders”

tZERO has allegedly violated federal disclosure rules, according to the Securities and Exchange Commission, who fined the blockchain-powered trading platform $800,000.

The subsidiary of Overstock.com was able to settle with the US financial watchdog under the condition of refraining from further regulatory violations.

tZERO

The SEC pressed charges against tZERO because it has allegedly failed to properly disclose key information in accordance with federal regulations.


The trading platform was sharing order information with a broker-dealer affiliate and Blue Ocean Technologies, a Singapore-based trading partner which it later acquired. tZERO also failed to file an amendment to its Form ATS with the SEC for more than two years.

“These proceedings arise out of Respondent’s operation of an alternative trading system (“ATS”), pursuant to an exemption from registration that required it to comply with Regulation ATS, promulgated under the Exchange Act.2 Regulation ATS requires, among other things, that ATSs make certain disclosures to the Commission”, said the SEC’s order.

“In addition, Regulation ATS requires an ATS that has a significant percentage of overall trading volume in a security or category of securities during a certain period of time to comply with a number of heightened requirements, known as the “Fair Access Rule”.

“Whether and how an ATS displays orders and trading interest is fundamental to any ATS’s operations because order display provides buyers and sellers with the expectation of liquidity in the ATS and the potential execution of a participant’s orders,” the SEC order added.

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tZERO launched major updates to crypto app

A few months ago, tZERO added five new altcoins to its trading platform: Bitcoin Cash (BCH), Stellar Lumen (XLM), Cardano (ADA), Compound (COMP), and Uniswap (UNI).

This brings its total available cryptocurrency suite to 15 different coins and coincides with recent updates to the tZERO crypto app.

The additional cryptocurrencies will complement tZERO’s existing product range of digital assets, which includes the already installed Bitcoin, Ethereum, Litecoin, Chainlink, Dogecoin, USDC, 0x, Bitcoin SV, Basic Attention Token, and Ravencoin.

The move comes on the heels of tZERO launching major updates to its crypto app, which introduced faster settlement times and higher buy limits: The app now supports $25,000 per day deposit limits as part of its standard offering.

tZERO Crypto has also partnered with a third-party custodian to custody investors’ assets in a regulated hosted wallet environment.

tZERO’s broker-dealer subsidiary, tZERO Markets, offers crypto sales, trading, electronic execution, and portfolio execution for buy- and sell-side clients.

The company’s retail brokerage service, which is also registered with the Securities and Exchange Commission (SEC), allows the firm to grab the capacity to serve individual traders instead of only accredited investors. Additionally, it provides token issuers with investment banking and placement agent services in connection with capital raising activities.