Robinhood Receives Wells Notice From SEC

The SEC continues its regulatory blitz against crypto, this time targeting traditional finance firm Robinhood with a Wells Notice filed on May 4.

A Wells notice is a warning the SEC sends firms stating the agency is preparing to bring an enforcement action against them. Robinhood received its notice for allegedly offering unregistered securities on its platform, an offense that also has Coinbase, Binance, and other exchanges in the agency’s crosshairs.

The company’s stock, HOOD, saw a slight drop in pre-market trading but has since recovered, changing hands for $18.

Robinhood posted a reply early Monday morning, stating, “After years of good faith attempts to work with the SEC for regulatory clarity, including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,” said Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer at Robinhood Markets.

According to the firm, Robinhood’s crypto arm has “made difficult choices not to list certain tokens or provide products, such as lending and staking,” and that the company had “heeded the SEC’s calls attempting to register a special broker-dealer with the agency.

War on Crypto

The SEC and its chairman, Gary Gensler, have been relentless in their crackdown on crypto.

Last year saw the agency slap protocols, projects, and people with regulatory action. Dozens of cryptocurrencies were named securities – leading Robinhood to end support for Cardano, Polygon, and Solana – and big-name companies like Binance were sued, with the company forced to pay a $4.3 billion fine for violating anti-money laundering laws.

Individuals leading companies also felt the brunt of the agency’s wrath, including Binance founder Changpeng Zhao, who recently received a four-month prison sentence for breaking the Bank Secrecy Act.

Coinbase, the leading U.S.-based crypto exchange, was also sued for unregistered securities offerings, but the company is fighting back, suing the SEC in a bid for regulatory clarity. One of its main competitors, Kraken, is also in a legal tussle with the agency over the same alleged offense.

Despite the notice, the company is not deterred from continuing its crypto business.

“Robinhood Crypto is here to stay and we’ll keep innovating, shipping products, and fighting for regulatory clarity for the good of the industry and our customers,” read their statement.