US-based crypto trading service Robinhood has run into legal trouble in the US. Earlier this week, the US Securities and Exchange Commission (SEC) issued a “Wells Notice” against Robinhood. With this, Robinhood has joined the list of other crypto companies, who have had to face the SEC and explain the intricacies of their business operations. US authorities want to ensure that its citizens who dabble in digital assets are protected from the financial risks these assets pose.
In the US, a Wells notice implies that authorities such as the SEC plan to take legal action against the entity to which it is issued, which in this case is Robinhood. The notice shows that, after investigation, the SEC has acquired reason to believe that Robinhood has violated US securities laws.
“On May 4, 2024, Robinhood crypto (RHC) received a 'Notice from Wells' stating that SEC staff has informed RHC that it made a 'preliminary determination' to recommend that the SEC file an enforcement action against RHC alleging violations of the Securities Exchange Act of 1934, as amended,” said the official document describing the development.
For now, detailed details about the proceedings of the case are still awaited.
“The potential action may involve a civil injunction, a public administrative proceeding, and/or a cease and desist proceeding and may seek remedies including an injunction, a cease and desist order, disgorgement, prejudgment interest sentence, civil, monetary sanctions and censorship, revocation and limitations of activities,” the document notes.
Many have criticized the SEC for scrutinizing the crypto sector by fighting one legal battle after another.
Robinhood is being sued by the SEC.
Welcome to the party @RobinhoodApp.
If you were wondering why Gary and the SEC are so brazen in their attack on crypto it is because he is taking orders from a deep faction of the US government that is trying to stifle crypto in the US. pic.twitter.com/ldQ0njTfXp
— RYAN SΞAN ADAMS – rsa.eth :unicorn_face: (@RyanSAdams) May 6, 2024
Aren't there like… actual securities violations that the SEC should be focusing on?
After initially stumbling, Robinhood has become one of the most buttoned-up fintechs out there. The idea that RH will cause consumer harm by selling ETH, AVAX, DOGE or LINK is laughable.… https://t.co/p5YGDRRN0l
— Laura Brookover (@laurabrooksie1) May 6, 2024
The SEC just sent a notice from Wells to Robinhood.
The number they have sent on crypto in the past few months is staggering. It is hard to imagine that they had (or could) carry so many execution actions at once.
It seems they are now abusing the Wells process as a scare tactic.
— Jake Chervinsky (@jchervinsky) May 6, 2024
The SEC had previously launched extensive investigations against crypto behemoths like Binance and Coinbase citing legal issues surrounding their respective business operations.
Meanwhile, Robinhood anticipates a significant increase in its profits and growth rate. In February, the company revealed that revenue collected from its crypto trading business rose 10 percent year-over-year in the fourth quarter, reaching $43 million (roughly Rs. 560 crore ).
