SEC Issues Wells Notice to Robinhood Over Crypto Operations

The staff of the SEC has provisionally decided to issue a Wells Notice, recommending enforcement action against Robinhood. This information was revealed in an 8-K filing made public on May 6, 2024. The details are provided in the section titled “Item 8.01,” which is designated as “other events.”

“As previously disclosed, Robinhood Crypto, LLC (“RHC”) has received investigative subpoenas from the Securities and Exchange Commission (“SEC”) regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations (the “RHC Activities”),” the 8-K filing details.

The company’s statement adds:

RHC has cooperated with this investigation. On May 4, 2024, RHC received a “Wells Notice” from the Staff of the SEC (the “Staff”) stating that the Staff has advised RHC that it made a “preliminary determination” to recommend that the SEC file an enforcement action against RHC alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934, as amended.

Robinhood further stated that the potential repercussions could include a civil injunctive action, a public administrative proceeding, and/or a cease-and-desist proceeding. The announcement comes after a notable series of regulatory actions against cryptocurrency firms in the past year. On April 10, Hayden Adams, the creator of Uniswap Labs, revealed that the firm had been served a Wells Notice by the SEC.

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