HomeCryptoRobinhood warns of potential SEC enforcement actions related to crypto operations

Robinhood warns of potential SEC enforcement actions related to crypto operations

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SEC Could Pursue Enforcement Action Against Robinhood, Trading Firm Warned

The Securities and Exchange Commission (SEC) is gearing up to take enforcement action against popular trading platform Robinhood, according to recent disclosures made by the company. Robinhood revealed in a filing on Monday that it had received a warning from the regulator over the weekend, indicating that following an investigation, charges could be brought against the firm.

Dan Gallagher, Robinhood’s chief legal, compliance, and corporate affairs officer, expressed disappointment in a blog post, 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.” He further added, “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.”

The news initially caused Robinhood’s stock to drop by 2%, but it has since rebounded and is currently trading up by 1%. This development comes after Robinhood disclosed in February that it had received subpoenas from the SEC related to its cryptocurrency business operations. The SEC has now reportedly found reason to suggest that Robinhood may have violated securities laws.

According to the filing, the SEC’s Staff has advised Robinhood Crypto that it has made a preliminary determination to recommend an enforcement action alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934. The potential action could involve a civil injunctive action, public administrative proceeding, and/or a cease-and-desist proceeding, seeking remedies such as an injunction, disgorgement, civil money penalties, and more.

Robinhood is scheduled to report its quarterly earnings on Wednesday, and this impending enforcement action by the SEC is likely to be a key topic of interest for investors and analysts alike. Stay tuned for further updates on this developing story.

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