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SEC Sends Warning to Robinhood Crypto
Robinhood Markets Inc. has received a Wells Notice from the US SEC, warning of possible enforcement action on its crypto operations.
According to a regulatory filing filed Monday, SEC staff made a preliminary decision recommending that the agency pursue enforcement action against Robinhood Crypto over its cryptocurrency listings, custody practices, and platform operations.
Potential consequences include an injunction, a cease-and-desist order, disgorgement, and other sanctions or operating restrictions, as outlined in the filing. Robin Hood disclosed that he had previously received a subpoena and has since cooperated with the SEC’s investigation.
A Wells notice allows companies to fight SEC charges before the agency proceeds with enforcement actions. However, the notice does not guarantee that formal action will be taken.
Robinhood Crypto has recently come under increased regulatory scrutiny as US authorities step up their focus on rapid evolution cryptocurrency industry.
Laura Brookover, former CFTC official and current Consensys attorney, criticized the SEC’s approach and questioned its goal.
“Are there…no actual securities violations that the SEC should be focusing on?” she asked in a post on X.
As of 9 a.m. EST, shortly after markets opened, Robinhood shares fell 5% following the agency’s subpoena announcement.