Robinhood Crypto Faces SEC Enforcement Action, Shares and Bitcoin Fall

Robinhood Crypto Faces SEC Enforcement Action, Shares and Bitcoin Fall

The Securities and Exchange Commission (SEC) has issued a Wells Notice to Robinhood Markets, particularly targeting its cryptocurrency trading division, Robinhood Crypto. This notice indicates that the SEC is considering enforcement action for potential violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934. The SEC's preliminary determination suggests possible civil injunctions, public administrative proceedings, or cease-and-desist orders against Robinhood.

Robinhood has responded to the Wells Notice by expressing its belief that the cryptocurrencies listed on its platform do not constitute securities. The company has made prior decisions not to list certain tokens and has refrained from offering products like lending and staking services that the SEC has identified as securities in actions against other firms.

The notice comes after a December 2022 investigative subpoena from the SEC regarding Robinhood's cryptocurrency listings, custodial services, and overall platform operations. It also follows previous enforcement actions by the SEC against other cryptocurrency platforms for similar issues. The announcement of the Wells Notice has coincided with a decline in Bitcoin's value, dropping below $64,000, and a 2.5% decrease in Robinhood's share price in premarket trading.

This development occurs as the SEC is slated to make a ruling on whether to approve an Ether ETF, amid wider discussions about the classification of cryptocurrencies as securities or commodities within the regulatory landscape.


Other news in finance