- Robinhood has received a Wells notice from the SEC, which has signaled potential legal trouble for its cryptocurrency division
- The SEC has suggested possible action against Robinhood for alleged securities violations related to crypto listings, custody, and platform operations
- The SEC has recently issued similar notices to Uniswap, which has declared its intention to contest any subsequent actions
Robinhood’s cryptocurrency division is on alert after receiving a Wells notice from the Securities and Exchange Commission (SEC), signaling potential legal trouble. The notification, detailed in an 8-K filing submitted Saturday, suggests that the SEC may take action against Robinhood for alleged securities violations involving its crypto listings, crypto custody, and platform operations. The agency has recently sent the same notices to Uniswap, which has declared that it was preparing to fight any action that may follow.
SEC Case “Weak” Says Legal Officer
Robinhood disclosed its receipt of the Wells notice yesterday, with the company’s chief legal officer, Dan Gallagher, saying that the company didn’t feel it had done anything wrong:
We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be.
A Wells notice is a formal communication from the SEC that hints at possible enforcement measures, such as injunctions, cease-and-desist orders, disgorgement, activity restrictions, or civil penalties. Coinbase received one last year prior to legal action from the SEC and Uniswap had one dropped through its letterbox around a month ago.
Previous Actions Signposts Expectations
Robinhood will have a good idea of what will follow given the action that the SEC has taken against the likes of Coinbase and, to a lesser extent Binance, with the latter facing further charges to alleged criminal activity.
Robinhood CEO and co-founder Vlad Tenev was even more bullish than Gallagher, stating that the company, calling the SEC’s actions an “improper attempt” to cripple the industry:
While we strive to maintain positive and productive relationships with our regulators, if necessary we will use our resources to contest this matter in the courts, with the intent of both defending our crypto business and establishing regulatory clarity in the United States for…
— Vlad Tenev (@vladtenev) May 6, 2024
Robinhood revealed last year that it was subpoenaed by the SEC in 2022 over its crypto listing and custody policies in the wake of the collapse of FTX and other high profile entities.
