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Robinhood Says SEC May Take Enforcement Action on Crypto Trades
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The Securities and Exchange Commission may soon take enforcement action against Robin Hoodaccording to the trading company.
Robinhood revealed in a statement Monday that over the weekend the regulator sent it a warning that upon completion of an investigation the company could face charges.
“After years of good faith attempts to work with the SEC to obtain regulatory clarity, including our notorious attempt to ‘go in and register,’ we are disappointed that the agency has decided to issue a Wells Alert regarding our cryptocurrency business in the United States,” Dan Gallagher, Robinhood’s head of legal, compliance and corporate affairs, wrote in a blog post.
“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,” he said.
Shares of the stock initially fell 2%, but reversed. They recently traded up 1%.
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Robinhood stock over the past month
Robinhood disclosed in February that it had received SEC subpoenas related to its cryptocurrency business, specifically cryptocurrency listings, custody and platform operations. According to Monday’s filings, the SEC has now found reason to suggest that Robinhood violated securities law.
“On May 4, 2024, [Robinhood Crypto] received a “Wells Notice” from the SEC staff… stating that the staff informed RHC that it had made a “preliminary determination” to recommend that the SEC bring an enforcement action against RHC for alleged violations of Sections 15 (a) and 17A of the Securities Exchange Act of 1934, as amended,” the filing reads.
“The potential action may involve a civil injunctive action, a public administrative proceeding, and/or a cease-and-desist proceeding and may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil law fines, censure, revocation and limitation of activity.”
Robinhood will release its quarterly earnings on Wednesday.