Robinhood Crypto faces SEC enforcement action with Wells Notice

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Trading platform Robinhood Crypto (RHC) has received a Wells Notice from the US Securities and Exchange Commission (SEC).

The SEC had been advised by staff to pursue enforcement action. This followed RHC receiving subpoenas from the SEC in February regarding its cryptocurrency listings, custody and platform operations.

This latest development comes in the form of a Wells Notice. This is typically issued as a cautionary measure, and serves as a notification to companies that the SEC has gathered adequate information to potentially initiate enforcement action.

Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer at Robinhood Markets, commented: “After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our US crypto business.”

Responding to the notice, the company wrote in a blog that it has made difficult choices not to list certain tokens or provide products, such as lending and staking. The SEC previously alleged that these assets are securities in public actions against other platforms.

This statement is in regards to Cardano, Polygon and Solana, which it stopped supporting on 27 June after they were named as securities in SEC lawsuits against Binance and Coinbase.

Furthermore, RHC has responded to the SEC’s calls and has attempted to register a special purpose broker-dealer with the agency.

Gallagher, a former SEC Commissioner himself, added: “We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”

Robinhood has assured its customers that this development will not affect their accounts or the services it provides.

The blog stated: “Robinhood Crypto is here to stay and we’ll keep innovating, shipping products, and fighting for regulatory clarity for the good of the industry and our customers.”