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FINRA Issues Its First Crypto Disciplinary Action


The U.S. Financial Industry Regulatory Authority has taken its first disciplinary action involving cryptocurrencies. The authority charges a broker with fraudulent and unlawful distribution of unregistered crypto securities. The owner allegedly "attempted to lure public investment in his worthless public company" by issuing "the first minable coin backed by marketable securities."

The U.S. Financial Industry Regulatory Authority (FINRA) has issued its first crypto-related disciplinary action. The organization announced on Tuesday, September 11, "that it filed a complaint against Timothy Tilton Ayre of Agawam, Massachusetts, charging him with securities fraud and the unlawful distribution of an unregistered cryptocurrency security called Hempcoin," adding:

This case represents FINRA's first disciplinary action involving cryptocurrencies.

FINRA is a not-for-profit organization authorized by Congress to protect investors in the US by ensuring that the broker-dealer industry operates fairly and honestly. Although the organization is not part of the government, it is overseen by the U.S. Securities and Exchange Commission (SEC). In addition, FINRA "has the authority to fine, suspend or bar brokers and firms from the industry," its website describes.

US Financial Industry Regulatory Authority Issues First Crypto Disciplinary Action

According to Tuesday's notice, "The issuance of a disciplinary complaint represents the initiation of a formal proceeding by FINRA in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint." All parties named in the complaint can file a response and request a hearing before a FINRA disciplinary panel, the notice details, noting:

Possible remedies include a fine, censure, suspension or bar from the securities industry, disgorgement of gains associated with the violations and payment of restitution.

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