The U.S. Securities and Exchange Commission (SEC) has alerted Robinhood Crypto that the regulatory agency will soon be pursuing legal action against the trading platform.
According to an 8-K Filing submitted over the weekend, Robinhood’s crypto trading arm, Robinhood Crypto, has received a Wells Notice from the SEC.
A Wells Notice is a warning issued by the SEC that it’s planning to pursue legal action against a company and is not an indication of wrongdoing.
According to Dan Gallagher, chief legal, compliance, and corporate affairs officer at Robinhood Markets, Inc., the company’s crypto trading arm has done no wrong.
“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 US crypto business.
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.”
The SEC is still in a court battle with the world’s largest publicly traded crypto exchange, Coinbase, dating back to last year.
The US regulator also brought similar charges against Binance, the world’s largest crypto exchange by trading volume, last summer.
According to crypto legal expert Jake Chervinsky, the SEC is abusing the Wells notice, using the legal warning as a scare tactic.
“If the SEC brings as many enforcement actions as it has sent Wells notices, it will be in flagrant violation of both the law and its Congressional mandate.
If not, it’s clearly abusing the Wells process to get free discovery and terrorize upstanding US companies.
Which is it?”
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