Robinhood’s cryptocurrency division may soon face issues with the U.S. Securities and Exchange Commission (SEC). In an 8-K filing on Saturday, Robinhood disclosed that it received a Wells notice from the SEC staff recommending enforcement action against the trading platform for alleged securities law violations.
The Wells notice, a letter from the SEC warning of potential enforcement action, follows Robinhood’s cooperation with SEC requests for investigative subpoenas on its cryptocurrency listings, custody, and platform operations. Possible SEC responses include a cease-and-desist order, profit disgorgement, activity restrictions, and civil penalties.
Coinbase also received a Wells notice months before the SEC sued it for securities law violations. Similarly, Binance was sued by the SEC, with its former CEO, Changpeng Zhao, now facing a four-month prison sentence.
Dan Gallagher, Robinhood’s Chief Legal Officer, stated, «We strongly believe that the assets listed on our platform are not securities and look forward to collaborating with the SEC to make clear how weak any case against Robinhood Crypto would be, both factually and legally.»
As a response to SEC actions against other trading platforms, Robinhood has already made the «difficult decision» to exclude certain tokens such as Solana, Polygon, and Cardano. Historically, the SEC has argued that some cryptocurrencies are considered securities, necessitating exchanges to register with the SEC, thereby granting regulatory control over registered tokens and exchanges.
Vía The Verge
