Robinhood Crypto Arm Is The Latest To Get A Wells Notice From The SEC

Updated: 07 May 2024

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The Securities and Exchange Commission (SEC) filed a Wells Notice against Robinhood’s crypto arm on May 6, indicating its intention to take enforcement action against the company.

The regulator has accused Robinhood Crypto of securities violations under “Sections 15(a) and 17A of the Securities Exchange Act of 1934,” according to a filing.

Robinhood “Disappointed,” Says SEC Case Is “Weak”

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,” said Dan Gallagher, Robinhood’s legal, compliance and corporate lead, in a May 6 statement.

Robinhood Chief Legal Officer Dan Gallagher on the 🇺🇸 SEC wells notice:

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells… pic.twitter.com/61WXTPogVI

— Lior 🇺🇸 🇮🇱 (@liorsela) May 6, 2024

“We firmly believe that the assets listed on our platform are not securities, “ he added. Gallagher said he looks forward to engaging with the SEC to show the regulator “how weak any case against Robinhood Crypto would be on both the facts and the law.”

SEC Floods The Crypto Sector With Wells Notices

Wells Notices are preliminary warnings sent to companies. They inform firms that the SEC believes it has enough information to bring an action against a company.

Robinhood becomes the latest crypto firm to receive such a notice this year. MetaMask Wallet developer, Consensys, and decentralized exchange, Uniswap, have disclosed that they also received Wells Notices from the SEC during the last month.

Today, Consensys took an important step towards preserving access to ether and by extension the Ethereum blockchain in the U.S. We are suing the SEC and fighting back against its overzealous regulatory overreach. You can find more of my thoughts here: https://t.co/VmvOsrCxjw… https://t.co/5IubZo69FW

— Joseph Lubin (@ethereumJoseph) April 25, 2024

Consensys went on the offensive and sued the regulator last month regarding the SEC’s categorization of Ethereum. It accused the SEC of an “unlawful power grab” in regulating the leading crypto as a security.