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Robinhood Markets receives warning from SEC over alleged securities violations at crypto unit
Robinhood Markets Inc. received a warning from the Securities and Exchange Commission regarding alleged securities violations by its crypto division
From
MICHELLE CHAPMAN AP Business writer
May 6, 2024, 9:51am ET
• 2 minute reading
Robinhood Markets Inc. has received a warning from the Securities and Exchange Commission regarding alleged securities violations by its crypto division.
The company said in a regulatory filing that it has received investigative subpoenas from the SEC on matters including cryptocurrency listings, cryptocurrency custody and platform operations.
Robinhood Crypto cooperated with the investigation, the company said.
Last week the crypto division received a Wells notice from SEC staff informing the unit that a preliminary decision had been made to recommend that the SEC bring an enforcement action against Robinhood Crypto for alleged securities violations.
The filing states that the potential action may involve a civil injunctive action, a public administrative proceeding, or a cease-and-desist proceeding. Remedies that may be sought include an injunction, a cease-and-desist order, disgorgement, prepaid interest, civil monetary penalties, as well as censure, revocation, and business limitations.
“After years of good faith attempts to work with the SEC to obtain regulatory clarity, including our notorious ‘go in and register’ effort, we are disappointed that the agency has decided to issue a Wells Alert regarding our cryptocurrency business in the United States.” Dan Gallagher, head of legal, compliance and corporate affairs at Robinhood Markets, said in a statement Monday. “We firmly believe that the assets listed on our platform are not securities, and we look forward to working with the SEC to clarify how weak any case against Robinhood Crypto would be on both the facts and the law.”
The company said its crypto unit chose not to list certain tokens or provide products, such as lending and staking, that the SEC previously said were securities in public actions against other platforms. He also attempted to register a specialist intermediary with the agency.
Robinhood said the SEC’s development will have no impact on its customers’ accounts or the services it provides. The company will release quarterly results on Wednesday after the market closes.
Robinhood shares gained 1% in morning trading.