Regulation
Robinhood Challenges SEC Notice, Affirms Crypto Compliance
Robin Hood Wells has officially responded to a notice from the United States Securities and Exchange Commission (SEC), which challenges its operations.
This notice hints at possible enforcement actions related to Robinhood Crypto (RHC), the company’s crypto division.
Robinhood “disappointed” by SEC Wells opinion
Dan Gallagher, Robinhood’s head of legal, compliance and corporate affairs, Express disappointment with the decision of the regulatory agency.
“After years of good faith attempts to work with the SEC to clarify the regulations, including our well-known attempt to ‘get in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our crypto operations in the United States. » Gallagher said.
Robinhood claims that the cryptocurrencies listed on its platform are not considered securities and is prepared to demonstrate the weakness of any SEC case against him factually and legally. The company is carefully navigating regulatory reality, choosing not to list certain tokens and avoiding services like cryptocurrency lending and staking, which the SEC has previously targeted at other platforms.
The company also attempted to register a special purpose broker-dealer specifically to align with SEC regulations, demonstrating its commitment to compliance.
Learn more: How to Buy and Sell Crypto on Robinhood: A Step-by-Step Guide
However, the SEC argues that Robinhood uses the “Overview” tab of its investor relations website and newsroom to disseminate information to the public on a broad and non-proprietary basis for purposes of the SEC’s Fair Disclosure Rule.
“As it was revealed that Robinhood Crypto, LLC (“RHC”) had received investigative subpoenas from the Securities and Exchange Commission (“SEC”) and on May 4, 2024, RHC received a “Wells Notice” stating “Staff had informed RHC that it had made a “preliminary determination” to recommend that the SEC initiate an enforcement action against RHC alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934,” the SEC commented in a note.
This situation comes as the SEC examines the cryptocurrency market, focusing on compliance and classification of digital assets. Robinhood’s ongoing dialogue with the SEC highlights the industry’s broader challenges in navigating an evolving regulatory framework.
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