NEW YORK, Monday, May 13, 2024 – Robinhood Markets Inc. disclosed last week that it had received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) regarding its cryptocurrency operations.
A Wells Notice informs a company that the SEC staff is considering recommending enforcement action.
The notice stems from an ongoing SEC investigation into Robinhood Crypto’s listing, custody, and platform operations for cryptocurrencies. Robinhood said it has cooperated with the investigation.
According to the filing, the SEC alleges that Robinhood Crypto violated Sections 15(a) and 17A of the Securities Exchange Act of 1934. These sections pertain to broker-dealer registration and recordkeeping requirements.
In a statement, Robinhood said it “firmly believes that the assets listed on our platform are not securities” and that it will “look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”
The SEC has not yet filed a formal enforcement action against Robinhood Crypto. The Wells Notice gives the company an opportunity to respond to the SEC’s allegations before the agency makes a final decision.
The Wells Notice casts uncertainty over the future of Robinhood’s cryptocurrency business.
The outcome of the SEC investigation could potentially lead to a variety of actions, including fines, restrictions on Robinhood Crypto’s operations, or even a complete ban on the company offering cryptocurrency services.
Investors should be aware of these developments and the potential impact on Robinhood’s stock price.
