Robinhood Responds to SEC’s Wells Notice

The U.S. Securities and Exchange Commission (SEC) earlier indicated its intent to recommend enforcement action against Robinhood Crypto (RHC) by issuing a Wells Notice. This development follows years of dialogue between the SEC and Robinhood, where Robinhood sought clear regulations for its cryptocurrency operations.

Dan Gallagher, Robinhood Markets, Inc. General Counsel, Chief Compliance Officer, and Corporate Secretary, complained about the SEC’s decision.

“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 U.S. crypto business,” he said the company’s view is that the digital assets it offers on its platform are not securities.

Gallagher mentioned that Robinhood is prepared to fight against any “action” that could take place following the preliminary judgment that lists shortcomings in facts and law before the case.

Additionally, the court may issue injunctions to stop misconduct, demand disgorgement of profits, add interest, and impose civil penalties. Those are some of the alleged injunctive relief that will be obtained from the preliminary Determination that the SEC quotes above.

This isn’t Robinhood’s first encounter with U.S. regulators. It has previously been subpoenaed by authorities like the California Attorney General’s Office, which requested details on its cryptocurrency trading and how it handles customer assets. This continued regulatory attention to the sector at large points toward a trend of increased scrutiny of cryptocurrency exchanges in the U.S.

Also read: Philippines SEC to Release Crypto Rules in Late 2024