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Robinhood Crypto gets Wells notice from US SEC

Published 05/06/2024, 09:21 AM
Updated 05/06/2024, 05:51 PM
© Reuters. Robinhood logo and representations of cryptocurrency are seen in this illustration taken December 12, 2023. REUTERS/Dado Ruvic/Illustration
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(Reuters) -Retail trading platform Robinhood (NASDAQ:HOOD) Markets said on Monday it received an enforcement action notice from the U.S. Securities and Exchange Commission (SEC) on May 4 over crypto tokens traded on its platform.

The company said it received a so-called "Wells notice," which the SEC issues when it is planning to bring enforcement action against them. Such notices do not necessarily mean the company has engaged in wrongdoing.

"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," Dan Gallagher, chief legal, compliance and corporate affairs officer at Robinhood, said.

The SEC has adopted a tough stance toward the digital currency industry, arguing most cryptocurrency tokens are securities and subject to its registration rules, while crypto firms have accused it of overreach. The regulator declined to comment on the enforcement action notice.

"If necessary we will use our resources to contest this matter in the courts," Robinhood CEO Vlad Tenev said in a post on X.

Coinbase (NASDAQ:COIN), the world's largest publicly traded cryptocurrency exchange, has also previously argued that crypto assets, unlike stocks and bonds, do not meet the definition of securities, a position held by the vast majority of the crypto industry. The SEC is engaged in a legal fight against Coinbase.

© Reuters. Robinhood logo and representations of cryptocurrency are seen in this illustration taken December 12, 2023. REUTERS/Dado Ruvic/Illustration

Robinhood Crypto enables customers to deposit and withdraw cyptocurrencies to and from its custodial platform and also routes customer orders to liquidity providers based on the lowest price. It has been attempting for nearly two years to register with the SEC.

Last year, it removed digital tokens Solana, Cardano and Polygon from its platform.

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