SEC Wells Notice Warns Robinhood Crypto of Potential Action

The SEC has sent a Wells Notice to Robinhood Crypto, which is a formal notice that the agency is considering taking enforcement action against the company.

The Wells Notice is a serious development that could have significant implications for Robinhood Crypto's operations and reputation.

The notice is related to the company's handling of customer funds, specifically its practice of commingling customer and company assets.

This practice has been a point of contention for regulators, who are concerned that it may not be in compliance with securities laws.

Robinhood Crypto has been trying to get regulatory clarity from the SEC for years, including attempting to register its US crypto business.

The company's Chief Legal, Compliance and Corporate Affairs Officer, Dan Gallagher, stated that they made a good faith attempt to register starting in late 2021.

They spent over a year and a half with more than a dozen meetings and calls with the SEC, making a written request for relief for a registered special purpose broker-dealer to support both digital asset commodities and securities.

Robinhood Crypto continued to engage with the SEC despite not being able to make any progress on their request for relief to register.

Dan Gallagher emphasized that they firmly believe the assets listed on their platform are not securities, and they look forward to engaging with the SEC to make their case clear.

Robinhood Crypto attempted to register with the SEC in good faith, starting in late 2021.

The company spent a year and a half meeting with the SEC over a dozen times, trying to get clarity on regulatory requirements. It even made a written request for relief to register as a special purpose broker-dealer.

Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer, expressed disappointment with the SEC's decision to issue a Wells Notice. He believes the assets listed on Robinhood Crypto's platform are not securities.

Robinhood Crypto has continued to engage with the SEC despite not making progress on its request for relief.