Key Insights
- Robinhood Crypto has received a Wells Notice from the SEC alleging securities violations related to its cryptocurrency listings.
- Robinhood denies that the crypto assets on its platform are securities and plans to contest the SEC’s case.
- The Wells Notice reignites concerns about SEC “regulation by enforcement” in the crypto industry under Chair Gary Gensler.
NEW YORK (MarketsXplora) – Robinhood Markets Inc’s crypto unit has received a Wells Notice from the U.S. Securities and Exchange Commission alleging securities violations related to its cryptocurrency listings, the online brokerage disclosed on Friday.
The regulator’s staff has preliminarily determined to recommend an enforcement action against Robinhood Crypto over the unit’s offering of certain digital assets, according to a regulatory filing.
“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,” said Dan Gallagher, Robinhood’s legal and compliance chief.
Robinhood Crypto offers trading in over a dozen cryptocurrencies including Bitcoin, Ether, Dogecoin and Shiba Inu on its platform.
The Wells Notice represents the latest salvo by the SEC in its crackdown on crypto firms over their product offerings amid fierce debate over which digital assets constitute securities requiring registration.
Several major crypto companies, including decentralized exchange Uniswap and blockchain developer ConsenSys, have received similar notices from the SEC in recent weeks, according to public statements.
The flurry of Wells Notices, which inform firms of prospective enforcement action and give them a chance to respond, has stoked concerns about regulation by enforcement from the U.S. securities watchdog under chair Gary Gensler.
“These Wells notices seem to be Gary Gensler’s desperate, last-ditch attempts to intimidate and antagonize digital asset innovators,” said Congressman Tom Emmer, who chairs the Republican majority’s big tech task force.
Emmer accused the SEC of overstepping its authority via intimidation tactics instead of establishing clear crypto rules, sentiments echoed by many in the digital asset industry who have urged clarity over regulation.
The SEC has taken an aggressive stance on crypto assets, with Gensler stating publicly that he believes most cryptocurrencies are unregistered securities. Meanwhile, the industry has pushed back, calling many crypto assets commodities or utilities outside the SEC’s jurisdiction.
The SEC case against Robinhood Crypto follows the brokerage disclosing last year it had received an investigative subpoena from the regulator related to its cryptocurrency listings.