FINRA Fines a Second Broker-Dealer Over Misleading Crypto Communications

FINRA has fined another broker-dealer over misleading retail communications about crypto assets, this time handing down an $85,000 penalty for failures that included unbalanced risk disclosures and a lack of clarity about how crypto services were being offered through a non broker-dealer affiliate. The case mirrors an earlier action this year and underscores FINRA’s ongoing emphasis on “fair and balanced” communications under Rule 2210.

This is not an isolated incident. FINRA’s recent sweep of crypto communications found potential violations in roughly 70 percent of materials reviewed, ranging from exaggerated claims to missing disclosures. Observers say firms should expect continued scrutiny as regulators push for greater transparency and accountability in this area.

At the heart of the problem are the same issues appearing repeatedly. Firms have highlighted benefits while downplaying or obscuring material risks. Promotions have often failed to clearly state when crypto services were delivered by a non-FINRA member affiliate, leaving investors confused about protections and membership status. Rule 2210 requires that communications avoid false, exaggerated, or misleading claims and include the material facts investors need to evaluate the product, yet firms continue to stumble on these fundamentals.

Compliance experts argue that firms must establish robust controls immediately. Every piece of communication should undergo pre-review using lexicons designed to flag red-flag terms such as yield, staking, secure, guaranteed, and institutional-grade, along with checks on affiliate status and SIPC coverage. If a communication highlights potential upside, it must also present risks like volatility, custody challenges, liquidity concerns, and regulatory uncertainty with equal prominence. The entity actually offering the crypto service must be named plainly, along with whether it is a FINRA member or SIPC-covered. Standards must apply consistently across all channels, from emails and social posts to app banners, SMS campaigns, and landing pages. Finally, firms should preserve an evidence pack containing drafts, approvals, reviewer notes, and distribution logs to demonstrate that their review process works.

Technology is emerging as a critical tool for staying compliant. AICompliance360, powered by Hadrius, offers AI-driven pre-review for Rule 2210, flagging promissory or unbalanced language and catching misstatements about affiliate status or protections before communications go live. Its disclosure intelligence automatically suggests required language for crypto content and checks for risk-benefit symmetry. The system applies a single supervisory standard across multiple channels, archiving artifacts and producing an approval trail that is audit-ready. Exception workflows route issues to principals, log sign-offs, and support quarterly quality assurance sampling. Dashboards and export features provide one-click exam packets that map findings to Rule 2210 requirements and firm procedures.

Hadrius is already in use at numerous broker-dealers and RIAs, allowing AICompliance360 to be deployed quickly and integrated into existing workflows. The solution gives firms a practical way to stay exam ready and reduce the risk of regulatory penalties.

Regulators are not easing up. With a second fine in quick succession and evidence of widespread deficiencies, crypto communication hygiene under Rule 2210 is no longer optional. Firms that cannot answer whether their promotions clearly name the offering entity and protections, whether risk prominence appears alongside benefits, whether app banners and social posts go through the same pre-review as emails and PDFs, and whether they can export a complete approval trail within minutes are leaving themselves vulnerable. AICompliance360 offers a way to catch the mistakes before FINRA does, turning compliance into a strength rather than a liability. Contact us today.

 Sources: InvestmentNews, FINRA, InvestmentNews, Consumer Financial Services Law Monitor, advertisinglaw.fkks.com