Markets
Robinhood Markets Receives SEC Notice for Alleged Securities Violations in Crypto Unit
Robinhood Markets Inc. received a warning from the Securities and Exchange Commission over alleged securities violations in its crypto division
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MICHELLE CHAPMAN AP Business Writer
May 6, 2024, 9:51 am ET
• 2 minutes of reading
Robinhood Markets Inc. has received a notice from the Securities and Exchange Commission regarding alleged securities violations in its crypto division.
The company said in a regulatory filing that it has received investigative subpoenas from the SEC on issues including cryptocurrency listings, cryptocurrency custody and platform operations.
Robinhood Crypto cooperated with the investigation, the company said.
Last week, the crypto division received a notice from Wells from the SEC staff informing the unit that a preliminary determination had been made to recommend that the SEC bring an enforcement action against Robinhood Crypto for alleged securities violations.
The filing said the potential action could involve a civil injunction, a public administrative proceeding or a cease and desist process. Remedies that may be requested include an injunction, a cease and desist order, restitution, prejudgment interest, civil monetary penalties, and censure, revocation, and limitations on activities.
“After years of good faith attempts to work with the SEC to achieve regulatory clarity, including our well-known ‘go and register’ attempt, we are disappointed that the agency has decided to issue a Wells Notice related to our crypto business in the US,” Dan Gallagher, director of legal, compliance and corporate affairs at Robinhood Markets, said in a statement on Monday. “We firmly believe that the assets listed on our platform are not securities and look forward to engaging with the SEC to make clear how weak any case against Robinhood Crypto would be, both on the facts and in law.”
The company said its crypto unit has chosen not to list certain tokens or provide products, such as lending and staking, that the SEC previously alleged were securities in public actions against other platforms. He also attempted to register a special purpose broker with the agency.
Robinhood said the SEC’s development will not affect its customers’ accounts or the services it provides. The company is scheduled to release its quarterly results on Wednesday after the market closes.
Robinhood shares rose 1% in morning trading.