SEC bars Prosperity operator Michael Levi Peters over unregistered brokerage

What changed

The SEC settled proceedings against Michael Levi Peters for unregistered brokerage through Prosperity's crypto-funded trading platform. The order finds that Peters solicited and effected stock-based CFD transactions constituting security-based swaps. It imposes a cease-and-desist order, an association bar with a right to apply for reentry after two years, and a $65,000 penalty. Peters did not admit the findings except jurisdiction and the limited bankruptcy-discharge provision. The stock-based-swap finding does not establish the securities status of every crypto asset or CFD offered on the platform.

Who it affects

• Michael Levi Peters
• Firms considering association with Peters
• Advisers evaluating client exposure to crypto-funded CFD platforms

What is still open

• Whether Peters will seek or receive reentry approval
• The regulatory and custody arrangements of other platforms using comparable service providers

What it means for an advisor

• Update personnel and promoter screening for Peters
• Review product classification and intermediary registration before facilitating crypto-funded trading
• Verify who controls client crypto margin assets and processes withdrawals