Robinhood Markets Inc. is contesting a wells notice from the U.S. Securities and Exchange Commission (SEC) that could lead to enforcement action against its cryptocurrency arm Robinhood Crypto (RHC).
Although the notice suggests a possible violation of securities laws, Robinhood maintains that its cryptocurrency listing does not qualify as a security.
The SEC Wells Notice received by Robinhood raises questions regarding RHC's cryptocurrency listings, custody practices, and overall platform operations.
Robinhood, the popular stock and cryptocurrency trading app, could face injunctions, disgorgement, or civil penalties.
Robinhood has said it is open to an SEC investigation and has sought clearer regulatory guidance through its registration efforts.
“We strongly believe that the assets listed on our platform are not securities, and we are working with the SEC to clarify how weak the case against Robinhood Crypto is from both a factual and legal standpoint. We look forward to working together,” said Chief Legal Officer Dan Gallagher. said the head of compliance and corporate affairs in a statement on Monday.
The SEC's focus on Robinhood is part of a broader pattern of regulatory trends, with similar actions being taken against other crypto entities such as Uniswap and Coinbase.
Robinhood's crypto division previously paid a $30 million fine to the New York Department of Financial Services for anti-money laundering and consumer protection-related violations.
