The U.S. Securities and Exchange Commission (SEC) sent retail trading platform Robinhood Markets (HOOD.O), opens new tab, an enforcement action notice on May 4 regarding cryptocurrency tokens traded on the site. The company announced this on Monday.
The business claimed to have received a “Wells notice,” which is a document the SEC sends out to businesses when it intends to take enforcement action. These notifications may not always indicate that the business has acted improperly.
Dan Gallagher, chief legal, compliance, and corporate affairs officer at Robinhood, stated, “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.”
The SEC has taken a severe position against the digital currency market, claiming that the majority of cryptocurrency tokens are securities and must be registered with it. However, cryptocurrency companies have criticized the agency for going too far. Regarding the enforcement action notification, the regulator chose not to respond.
The great majority of the cryptocurrency sector has traditionally taken the stance that crypto assets do not fall within the definition of securities, in contrast to stocks and bonds. This is also the case with Coinbase (COIN.O), opens new tab, the largest publicly listed cryptocurrency exchange in the world.
The SEC and Coinbase are involved in a court battle. It was claimed last year that the cryptocurrency exchange was acting unlawfully as a national securities exchange, broker, and clearing agency without registering with the regulator and that it had enabled the trade of at least 13 cryptocurrency tokens that ought to have been registered as securities.
Customers may deposit and withdraw cryptocurrency to and from Robinhood Crypto’s custodial platform. Orders are routed to liquidity providers based on the best price. It has been trying to register with the SEC for over two years.
