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SEC's Latest Wells Notice Targets Robinhood

Key Takeaways

  • The SEC issued a Wells notice to Robinhood, signaling possible enforcement action due to suspected securities violations;
  • Dan Gallagher, Robinhood's Chief Legal Officer, expressed disappointment, emphasizing the company's consistent efforts to comply with SEC rules;
  • Regulatory uncertainty continues without clear SEC guidelines on digital assets.
SEC's Latest Wells Notice Targets Robinhood

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.

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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.

Aaron S., Editor-In-Chief
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.
Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.
Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.

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