The US Securities and Exchange Commission (SEC) recently issued a Wells notice to the trading platform Robinhood.
This notice is a formal letter from the regulator suggesting it might take enforcement action due to possible securities violations related to Robinhood's crypto listings and custodial practices.
Did you know?
Want to get smarter & wealthier with crypto?
Subscribe - We publish new crypto explainer videos every week!
What is a Perpetual Contract in Crypto? (Definition + Example)
Dan Gallagher, Robinhood's Chief Legal, Compliance, and Corporate Affairs Officer, voiced his disappointment in a May 6 blog post, emphasizing the company's efforts to comply with SEC regulations.
Robinhood has taken a cautious approach to crypto, avoiding the listing of certain tokens and not offering services like crypto lending and staking, which have been areas of focus in SEC scrutiny elsewhere. Gallagher 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.
With no clear federal guidelines yet from the SEC or the Commodity Futures Trading Commission on the classification of digital assets as securities or commodities, Robinhood and similar platforms continue to operate under high regulatory uncertainty.
Similarly, Ripple Labs faced legal challenges with the SEC, which proposed a $1.95 billion fine against the company for securities law violations. In response, Ripple contested the fine, suggesting that a penalty of up to $10 million would be more appropriate.
