• The SEC is set to file a lawsuit against Robinhood’s crypto business
• The SEC issued a Wells Notice to Robinhood on May 4th, notifying them of impending enforcement action
• The SEC alleges that Robinhood is offering customers unregistered securities in the form of digital assets
The U.S. Securities and Exchange Commission (SEC) is set to file a lawsuit against Robinhood‘s crypto business after issuing a Wells Notice to the company on May 4th. This comes after Robinhood received investigative subpoenas from the SEC regarding its digital asset listings, custody, and operations.
Background on SEC Investigations
Over the last few years, there has been significant opposition between the SEC and the digital asset market. The industry has tried to facilitate increased regulation in the U.S., but has been required to comply through an enforcement approach instead. This has led to many legal actions from the SEC against various crypto platforms.
Details of Wells Notice to Robinhood
Specifically, Robinhood received a Wells Notice from the SEC in early May. This letter acts as a notification of impending enforcement action by the agency. The notice states the SEC has made a preliminary determination to recommend enforcement action against Robinhood for alleged violations of the Securities Exchange Act of 1934.
The SEC has essentially alleged that Robinhood is offering customers digital assets that are unregistered securities. This distinction has become very important amid the ongoing regulatory battle, especially regarding Ethereum.
Conclusion
The SEC’s lawsuit against Robinhood’s crypto business represents the latest clash between the agency and the digital asset industry. As regulation continues to increase in the U.S., more crypto platforms may face similar enforcement actions for allegedly offering unregistered securities. The outcome of the SEC’s case against Robinhood could have significant implications for the future of crypto regulation.
