Robinhood has revealed to have received an enforcement letter from the US Securities and Exchange Commission for crypto tokens traded on its platform.
According to the American financial services company, it has received the “Wells Notice” on May 4 and can face charges from the regulator. On the other hand, it clarified that such a notice does not necessarily imply it has engaged in wrongdoing, a report from Reuters detailed.
This is the SEC’s latest round of regulatory development involving crypto platforms, the most prominent to date being the filing of lawsuits against Binance and Coinbase in June 2023 over claims of violating security laws.
A report from Forbes said that the Wells Notice indicates that the agency has conducted a preliminary determination to file for an enforcement action against Robinhood Crypto for supposed violations of federal laws for securities brokers.
According to the SEC, the notice will give Robinhood the chance to dismiss allegations. However, potential actions may involve cease-and-desist orders or civil injunction which could result in monetary repercussions.
In worse cases, this could also result in revocation and/or limitations of future trading activities involving the assets concerned. In an statement, Robinhood’s Chief Legal, Compliance, and Corporate Affairs Officer Dan Gallagher said, “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.”
Moreover, the company’s CEO asserted of their willingness to leverage their resources to contest the matters on court.