• 26 May, 2024

Robinhood Markets Receives SEC Wells Notice Over Crypto Listings

Robinhood Crypto, the digital assets arm of the popular retail trading platform, has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC). The filling, issued on May 4, specifically targets the company’s cryptocurrency listings and the way it handles customer assets. Such notices are not a direct accusation of wrongdoing but serve as an indication that the SEC may pursue further legal action.

In response, Dan Gallagher, Robinhood’s Chief Legal, compliance, and corporate affairs officer, firmly reiterated the company’s stance. “We firmly believe that the assets listed on our platform are not securities,” Gallagher stated. He emphasized Robinhood’s intention to work with the SEC to highlight “just how weak any case against Robinhood Crypto would be on both the facts and the law.”

The SEC has taken an aggressive approach toward digital currency regulation, claiming that most crypto tokens qualify as securities under the Howey Test and should adhere to registration requirements. Crypto firms, however, have often criticized the SEC’s actions as overreaching. Coinbase, another significant player in the crypto exchange space, has also contested the regulator’s classification of crypto tokens. The SEC is currently engaged in a legal battle with Coinbase.

Robinhood’s CEO, Vlad Tenev, highlighted the company’s readiness to use its resources to defend its position, “If necessary, we will use our resources to contest this matter in the courts.”

The regulatory notice comes amid a wave of SEC warnings aimed at U.S. crypto firms. Robinhood Crypto has been under scrutiny due to previous investigative subpoenas regarding its listing process and how customer assets are stored. The SEC’s actions could include civil litigation or cease-and-desist orders.

In the wake of last year’s enforcement actions against Coinbase and Binance, Robinhood Crypto removed tokens such as Solana, Cardano, and Polygon from its platform. The firm has been working for two years to register with the SEC, but its applications have yet to yield approval.

Robinhood Crypto maintains limited offerings compared to other exchanges, differing state by state. For instance, New York investors can access only 15 cryptocurrencies through the platform, while European customers can choose from up to 30.

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