As Robinhood continues to traverse the complexity of the financial regulatory landscape, Vlad Tenev the company’s Chief Executive Officer (CEO), has taken center stage to address the Wells Notice receipt from the United States Securities and Exchange Commission (SEC) regarding its cryptocurrency business.
Tenev’s response to the SEC’s Wells Notice highlights the firm’s commitment to handling regulatory issues while upholding Robinhood’s objective of democratizing finance.
Robinhood Receives Wells Notice From US SEC
Last week, the SEC issued a Wells Notice to Robinhood about possible securities violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934 at its cryptocurrency subsidiary. The company disclosed in a regulatory filing that the Commission sent investigative subpoenas concerning crypto listings, crypto custody, and platform operations.
The filing read:
As previously disclosed, Robinhood Crypto, LLC (RHC) has received investigative subpoenas from the Securities and Exchange Commission (SEC) regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations (the RHC Activities).
This move by the agency could potentially entail a public administrative proceeding, a cease-and-desist proceeding, or a civil injunctive action. It could also seek remedies that include disgorgement, a cease-and-desist order, civil money penalties, disgorgement, revocation, and activity limitations.
It is worth noting that the regulatory watchdog issued the Wells Notice report despite Robinhood’s effort to engage with the Commission multiple times concerning its cryptocurrency operations.
Responding to the report, Robinhood’s CEO Vlad Tenev stated that the firm met with the SEC over 16 times, but each time has been unsatisfactory. “We actually came in good faith to meet with the SEC and I think we met with them 16 times and, unfortunately, that was not reciprocated,” he stated.
Although the CEO is uncertain of the reason behind the SEC’s disappointing response, he revealed that the Commission asked Robinhood to cease its engagement, as they do not see a path toward the company’s business.
Tenev further noted that the SEC has the authority to alter regulations so that brokers can accept cryptocurrency assets, but it does not seem like the agency is willing to do so. Instead, the SEC is moving forward with regulation through enforcement, which is disheartening.
The Company’s Dedication To Uphold Its Stance
So far, Tenev has underscored the company’s commitment to defend its position and advocate customer safety. This is due to his confidence in crypto assets gaining more importance in the world today, and it would not be appropriate for Americans to be denied exposure to them.
In an X post, the Robinhood CEO affirms that the firm aims to protect its crypto platform and bring about regulatory clarity in the US for the good of its customers. Consequently, they will utilize every resource to fight the SEC in court if needed, as they continue to work hard to keep good and productive relationships with regulators.