Robinhood Crypto, the encryption arm of the US online brokerage Robinhood, received a Wells Notice from the US Securities and Exchange Commission (SEC) on May 4. This is the third encryption-related company to receive this notice, following Uniswap and Consensys in April. It also indicates that SEC staff have made a preliminary decision to take enforcement action against the company, accusing it of violating securities regulations.
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ToggleSEC charges Robinhood with securities violations
Robinhood said in a statement that SEC staff had made a preliminary decision to recommend enforcement action against the crypto unit, alleging securities violations.
Dan Gallagher, chief of legal, compliance and corporate affairs at Robinhood Markets, said:
Over the years, we have tried in good faith to work with the SEC to increase regulatory transparency, but we are disappointed with the agency's decision to issue a Wells Notice related to our U.S. crypto operations.
Robinhood received an SEC subpoena shortly after cryptocurrency exchange FTX filed for bankruptcy in November 2022. The subpoena seeks to provide information on topics such as "cryptocurrency inventory, cryptocurrency custody and platform operations."
Robinhood Crypto has since made a number of concessions, including not listing certain tokens or offering products such as lending and staking (the SEC has said these tokens are securities in public actions against other platforms). In addition, Robinhood is also trying to register a special purpose broker-dealer with the SEC.
Uniswap and Consensys have also recently received Wells notifications
Last month, decentralized cryptocurrency exchange Uniswap received a Wells Notice from the SEC. Uniswap founder Hayden Adams expressed disappointment at the time: Instead of committing to clear, informed rules, the SEC decided to focus on attacking long-term good players such as Uniswap and Coinbase, while letting bad guys like FTX slip away.
Ethereum infrastructure developer Consensys also received the SEC's Wells Notice in April and decided to take the initiative to sue the SEC. The indictment also found that the SEC has been investigating Consensys' product MetaMask for many years. Consensys said that regulating Ethereum as a security would jeopardize the ability of the United States to use Ethereum and other blockchains. If the value and belief of Ethereum based on a decentralized platform are destroyed, this may lead to a catastrophe in the U.S. encryption industry. Large-scale layoffs.
( Consensys sues the SEC, supports Ethereum, and points out "four reasons" why ETH is not a security )
