According to FINRA, Firstrade Securities Inc. was censured and fined $85,000 for distributing retail communications about crypto assets that failed to make required disclosures and were not fair and balanced.

The Flushing, New York firm's communications concerning crypto assets offered by an affiliate failed to prominently disclose that the crypto assets were not offered by the firm itself. The affiliate was not a registered broker-dealer or member of FINRA or the Securities Investor Protection Corporation (SIPC).

This distinction matters significantly for investors. When you invest through a registered broker-dealer that is a SIPC member, your securities are protected up to certain limits if the firm fails. Crypto assets held by an unregistered affiliate do not receive this protection.

Many of the communications also failed to prominently disclose the name of the firm or clarify which products were being offered by the registered broker-dealer versus the unregistered affiliate.

Additionally, most communications failed to provide balanced treatment of risks and potential benefits. They omitted that the crypto assets were speculative and involved a high degree of risk.

The firm's crypto affiliate has since ceased offering crypto assets, and the firm stopped distributing these communications.

For investors considering crypto assets through any platform, it is critical to understand which entity is offering the product and what protections, if any, apply. Crypto assets are speculative investments that can lose significant value rapidly. They generally do not receive the same protections as securities held at registered broker-dealers.

Always verify whether a product is offered by a registered, SIPC-member firm or by an unregistered affiliate, and understand the implications for your investment protection.