This is an instance where the actual rule violation, failure to qualify employees, is very straightforward.  Throwing on a Rule 2010 violation adds nothing to the matter. Rule 2010 might as well "say thou shalt violate no other FINRA rule."

It is unlikely that the firm was maliciously reporting securitized transactions to TRACE that were not required to be reported. The trade reporting rules have gotten to be so complicated that firms struggle to understand what is required. Rather than imposing significant fines, FINRA should view most violations as opportunities to explain what the firm misunderstood and to clarify the relevant rules.  

While the dropping of the charges is certainly a victory for the individual defendants and perhaps for the crypto industry, it does not reflect well on the SEC.  

The SEC has taken the view that all sales of cryptocurrencies (except Bitcoin and possibly Ether) are sales of securities on the basis that they constitute investment contracts. The SEC has taken this view without a meaningful attempt to analyze what is it about any individual sale that constitutes the investment…

The Vice Chair's proposal for additional "exploratory" stress testing does little to blunt criticism of the FRB's failure to miss the impact of inflation on asset values. At least judged in retrospect, it is hard to imagine how inflation was not a principal concern of the financial regulators under its current stress tests. It makes one wonder how much of the FRB's attention was distracted from economic factors by other concerns (e.g., ) and the extent to which the distraction…