Commission free brokerage firm Robinhood Markets Inc has bagged a Wells Notice from the US SEC. The company made this disclosure in a Form 8-K filing it published on Monday, showcasing it is on the regulators’ radar.
Will the SEC Sue Robinhood?
Per the details in the filing, Robinhood Crypto, the firm’s digital currency trading unit was the outfit that received the Wells Notice. The regulator is accusing the company for violating securities violations as it concerns some of its listings.
A Wells Notice is a letter the SEC sends to firms after a preliminary investigation into its practices. Ideally, a Wells Notice precedes an enforcement action, a historic trait that suggests Robinhood might face a similar lawsuit.
Robinhood revealed in its disclosure that it plans to keep engaging with the regulator in good faith. The firm said it is convinced the assets on its platform are not investment contracts.
“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,” said Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer, Robinhood Markets, Inc.
As earlier reported by BGEcrypto, Robinhood recently extended the listing of Shiba Inu to New York residents. However it noted that it has taken the pain to avoid offering products like Staking. In earlier lawsuits filed against firms like Kraken and Coinbase, the SEC labeled staking investment contracts.
SEC and Crypto Lawsuit
The US SEC and other regulators in the country are known for their cases against crypto entities. The same charges the SEC has teased with Robinhood was also levied against Coinbase and Binance Exchange last year.
While many of the crypto firms it has picked a fight with have chosen to fight back, it remains to be seen what Robinhood’s approach will be. The firm will have the option to explore settlement or to escalate the lawsuit, if filed, to the court.
