In the latest episode of the ongoing regulatory crackdown on the cryptocurrency industry, crypto exchange Robinhood received a Wells Notice from the US Securities and Exchange Commission (SEC) staff.
Regulatory Turmoil For Robinhood
The notice indicates that the staff will recommend that the Commission pursue an enforcement action against the trading platform. Robinhood expressed disappointment in the SEC’s decision, emphasizing their efforts to seek regulatory clarity and asserting their belief that the assets listed on their platform are not securities.
Robinhood has been actively engaging with the SEC to establish regulatory clarity for its operations, including attempting to register a special-purpose broker-dealer per the agency’s recommendations.
Despite their efforts, the SEC issued the Wells Notice, raising concerns about Robinhood’s US crypto business. The SEC previously charged Robinhood with misleading customers about revenue sources and failing to meet best execution obligations.
Confident In Regulatory Position
Dan Gallagher, Chief Legal, Compliance, and Corporate Affairs Officer at Robinhood Markets, Inc., expressed disappointment in the SEC’s decision. He stated:
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.
Gallagher further expressed confidence in Robinhood’s position, asserting that the assets listed on their platform are not securities. The company looks forward to engaging with the SEC to demonstrate the weakness of any case against the crypto exchange based on facts and the law.
The exchange also reassured its customers that this development would not affect their accounts or the services provided by the platform. They emphasized that the firm is “here to stay” and will continue to ship products and advocate for regulatory clarity in the industry’s and customers’ best interest.
Following the SEC’s potential enforcement action, the company’s stock plummeted to $16.55, resulting in a 7.80% decline in price, according to Robinhood’s website data.
Featured image from CNBC, chart from TradingView.com