Robinhood braces for SEC charges over crypto trading

Online trading platform Robinhood is bracing for potential lawsuits and administrative orders from the Securities and Exchange Commission (SEC) over its cryptocurrency products.

recently Regulatory filingthe platform revealed that its digital currency trading operation, Robinhood Crypto, has received a “wells notice” from the SEC, a formal warning of pending enforcement action.

“Despite our years of good faith efforts to work with the SEC for regulatory clarity, including well-known attempts to ‘come and register,’ the We are disappointed in the decision to issue Wells notices related to our currency business,” said Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer at Robinhood.

Mr. Gallagher also served as an SEC Commissioner from 2011 to 2015.

“We strongly believe that the assets listed on our platform are not securities, and the SEC We look forward to working with you.”

Robinhood said in a statement that the company “made the difficult choice not to list or offer products for certain tokens that the SEC had previously claimed were securities,” adding, “We have heeded the SEC’s call and are offering special “We attempted to register the intended broker-dealer with the agency.”

Wells notices notify companies regulated by the SEC that SEC staff will recommend that the Commission take enforcement action. Such actions may result in a civil lawsuit or cease and desist order.

Robinhood’s notice is the latest flashpoint in a long-running battle between the SEC and the crypto industry that continues under SEC Chairman Gary Gensler, a Democrat appointed by President Biden in 2021.

Mr. Gensler has been harshly critical of the burgeoning cryptocurrency industry and the explosion of investment products containing or related to digital currencies. Under Gensler, the SEC has taken aggressive action to crack down on crypto investment products that it claims violate federal financial regulations.

However, crypto companies argue that the SEC is refusing to issue clear guidelines for the industry while punishing companies that come to the SEC seeking understanding of the law.