- Robinhood has responded to the “Wells Notice,” believing assets offered are not securities.
- SEC has increased crackdown on crypto firms since November.
Retail trading platform Robinhood has announced the receipt of the so-called “Wells Notice” from the US Securities and Exchange Commission (SEC). The notice relates to crypto tokens offered on the Robinhood trading platform.
The issuance of the “Wells Notice” comes even as the SEC continues its crackdown on the crypto sector. The “Wells Notice” is issued when the regulator plans to bring an enforcement action against an entity, although it doesn’t suggest wrongdoing.
The action has attracted criticism, with Variant Fund legal lead Jake Chervinsky saying that SEC is “abusing the Wells process as a scare tactic now.” Reports indicate that the SEC has brought at least one lawsuit every month against crypto companies since November.
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Security Offerings
SEC has firmly held that most crypto tokens are securities and thus fall under its registration rules. In response to the regulator, Robinhood’s Chief Legal, Compliance and Corporate Affairs Officer 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 on both the facts and the law.”
It is unclear which tokens SEC considers security in light of the latest enforcement notice against the brokerage firm.
In the past, Robinhood has delisted several tokens from its platform, including Cardano (ADA), Solana (SOL), and Matic (MATIC), after the regulator went for rival trading entities. The company also disclosed that it made the decision not to provide various products, including staking and lending services, in light of SEC’s enforcement on other platforms.
