SEC Recommends Enforcement Action Against Robinhood’s Crypto Arm

The Securities and Exchange Commission (SEC) has taken a significant step towards enforcement action against Robinhood Markets’ crypto arm. The popular trading platform disclosed that it had received a “Wells Notice” from the SEC, indicating that the agency’s staff has recommended filing an enforcement action against the company.

The SEC has been investigating Robinhood’s cryptocurrency listings and other related topics, arguing that cryptocurrencies are securities and should be subject to regulatory oversight. Robinhood, on the other hand, has rejected this argument and maintained that the assets listed on its platform are not securities.

In response to the Wells Notice, Robinhood’s chief legal, compliance, and corporate affairs officer, Dan Gallagher, expressed disappointment with the SEC’s decision. He stated that the company has made good faith attempts to work with the SEC for regulatory clarity and believes that any case against Robinhood Crypto would be weak on both factual and legal grounds.

Despite the regulatory challenges, Robinhood’s stock was up 1.9% to $18.29 on Monday, while the S&P 500 rose 0.6%. The company remains optimistic about engaging with the SEC to address the enforcement action and clarify its position on cryptocurrency trading.

For more updates on this developing story, readers can reach out to Emily Dattilo at emily.dattilo@dowjones.com.