SEC To File Lawsuit Against Robinhood’s Crypto Business

Joshua Ramos
Robinhood's Crypto Trading Takes a Major Hit: May Volume Falls 68% to $2.1B
Source: Tom’s Guide

The US Securities and Exchange Commission (SEC) is set to file a lawsuit against Robinhood’s crypto business. Indeed, the agency has issued a Wells Notice to the company, which notified Robinhood of impending enforcement action against them.

Robinhood had been the recipient of investigative subpoenas from the SEC regarding digital asset listings, custody, and operations. Moreover, the company had noted its compliance to the fullest extent of its capabilities with these investigations. Subsequently, the Wells Notice was issued on May 4, 2024.

Also Read: SEC Has Been Investigating Ethereum (ETH) Since March 2023

Robinhood Gets Wells Notice From SEC

Over the last few years, the opposition to the SEC and the digital asset market has been undeniable. Over the last several years, the industry has sought to abide by and facilitate increased regulation in the United States. Yet, they have been required to comply with the agency’s regulations through an enforcement approach.

That approach has led to a plethora of legal actions from the agency on a host of cryptocurrency platforms. Another has joined the list, with the SEC set to file a lawsuit against Robinhood’s crypto business.

Source: CNBC

Also Read: Michael Saylor Says SEC Will Classify Ether As Security, Deny Spot ETFs

Specifically, the company received a Wells Notice from the SEC in early May. Subsequently, the letter acts as a notification of impending enforcement action from the agency. However, its presence came after Robinhood was given investigative subpoenas from the SEC prior to the Wells Notice issuance.

The notice states the agency has made a “preliminary determination,” in recommending an enforcement action against Robinhood. Specifically, this action is filed against allegations of Securities Exchange Act of 1934 violations.

The agency has essentially alleged that Robinhood is offering customers digital assets that they categorize as unregistered securities. The distinction has become immensely important in the ongoing regulatory battle, most recently in regard to Ethereum.