Solaris SE SEC Charges: German Bank to Pay $1.7M Settlement

WASHINGTON – The U.S. Securities and Exchange Commission on June 13, 2024, announced settled charges against German fintech bank Solaris SE for acting as an unregistered broker-dealer in connection with a crypto asset offering. Solaris, which did not admit or deny the findings, agreed to pay nearly $1.7 million in disgorgement, interest, and penalties to resolve the matter. The action underscores the agency's continued focus on intermediaries in the digital asset space, with the **Solaris SE SEC charges** highlighting regulatory risk for traditional financial firms providing services to crypto platforms.

According to the SEC's order, Solaris entered into a partnership with U.S.-based crypto platform Uphold Inc. to facilitate the offer and sale of a crypto asset security called DIGG. The DIGG token was created by an unaffiliated entity, Badger DAO, and was designed to be an elastic-supply cryptocurrency pegged to the price of Bitcoin. The SEC concluded that DIGG was offered and sold as a security.

The Unregistered Broker Activity

The SEC found that between October 2020 and October 2021, Solaris provided “white-label” services that enabled Uphold to offer DIGG to its U.S. retail customers. Through this arrangement, Uphold’s customers were onboarded as customers of Solaris. The German bank then processed their transactions, holding both U.S. dollars and crypto assets, including DIGG, in omnibus accounts on behalf of these customers.

Solaris's systems were used to execute customer orders to buy and sell DIGG. For its role, Solaris received a share of the revenue generated from transactions with U.S. investors. The SEC determined that by soliciting customers, processing transactions, and collecting transaction-based compensation without being registered with the Commission, Solaris engaged in the business of effecting securities transactions for the accounts of others, thereby acting as an unregistered broker.

Section 15(a) of the Securities Exchange Act of 1934 makes it unlawful for any broker to effect transactions in securities without proper registration with the SEC. The order states that Solaris did not qualify for any exemption from this registration requirement.

A Warning to Financial Intermediaries

SEC officials emphasized that securities laws apply equally to all market participants, whether they are legacy financial institutions or emerging crypto firms. “The registration requirements are a cornerstone of the securities laws, providing investors with essential protections,” said Carolyn M. Welshhans, Associate Director of the SEC’s Division of Enforcement, in a public statement.

“Solaris, despite its status as a foreign-based financial institution, played a critical role as an unregistered broker-dealer in the offer and sale of a crypto asset security to U.S. investors,” Welshhans added. “Today’s action serves as a reminder that the securities laws apply with equal force to traditional financial institutions and firms in the crypto asset space.”

The enforcement action follows previous SEC charges against Uphold's former partner, Bittrex Inc., and its own 2023 charges against Badger DAO for the unregistered offer and sale of DIGG tokens.

Terms of the Settlement

To settle the **Solaris SE SEC charges**, the company agreed to a cease-and-desist order prohibiting it from future violations of the broker-dealer registration provisions. The financial terms of the settlement include:

* **Disgorgement:** $375,176 * **Prejudgment Interest:** $39,835 * **Civil Penalty:** $1,300,000

This brings the total monetary payment to $1,715,011. Solaris consented to the order without admitting or denying the SEC's findings. The SEC's investigation was conducted by staff from the Division of Enforcement's Crypto Assets and Cyber Unit.

What This Means

The Solaris case is significant for several reasons. First, it demonstrates the SEC's global reach, reinforcing that foreign entities facilitating crypto-asset securities transactions with U.S. investors are subject to U.S. securities laws. The physical location of the company providing the service is secondary to the location of the investors it serves.

Second, the action is a clear warning to fintechs and traditional banks that provide backend or “white-label” services to crypto companies. The SEC's broad interpretation of a “broker” means that any firm involved in routing orders, handling customer funds, and receiving transaction-based a fee could fall under its jurisdiction and require registration. This has major compliance implications for financial institutions exploring partnerships in the digital asset industry. The case signals that simply acting as a technology or service provider does not create a safe harbor from securities regulations.