The US Securities and Exchange Commission (SEC) has warned Robinhood Crypto that the regulatory agency will soon take legal action against the trading platform.
According to an 8-K filing filed this weekend, Robinhood’s crypto trading arm, Robinhood Crypto, has received a Wells Notice from the SEC.
A Wells Notice is a warning from the SEC that it intends to take legal action against a company and is not an indication of wrongdoing.
According to Dan Gallagher, head of legal, compliance and corporate affairs at Robinhood Markets, Inc., the company’s crypto trading division has done nothing wrong.
“After years of good faith efforts to work with the SEC for regulatory clarity, including our well-known effort to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice regarding our US crypto activities.
We are confident that the assets listed on our platform are not securities and we look forward to engaging with the SEC to clarify how weak a case against Robinhood Crypto would be, both on the facts as well as in the field of law.”
The SEC is still embroiled in a lawsuit with the world’s largest publicly traded cryptocurrency exchange, Coinbase, dating back to last year.
The US regulator also filed similar charges last summer against Binance, the world’s largest crypto exchange by trading volume.
According to crypto legal expert Jake Chervinskythe SEC misuses Wells’ message and uses the legal warning as a scare tactic.
“If the SEC takes as many enforcement actions as it has sent Wells notices, it will be in flagrant violation of both the law and Congress’ mandate.
If not, the Wells process is clearly being abused to obtain unfettered discovery and terrorize leading American companies.
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