US SEC has closed its probe against Robinhood Crypto over a Wells Notice issued to the brokerage last year.
By Godfrey Benjamin
Edited by Marco T. Lanz
Updated
3 mins read
The crypto arm of brokerage firm Robinhood Markets Inc. has recorded victory on the Wells Notice issued by the US Securities and Exchange Commission (SEC). In a significant development, Robinhood announced it has received a formal letter from the SEC’s Enforcement Division stating its intent to discontinue an enforcement action kickstarted against the exchange in May 2024.
Notably, through its Enforcement Division, the regulatory authority communicated with Robinhood Crypto that it had concluded its investigations. The SEC said it would not pursue enforcement action against the exchange after completing the investigation.
For context, when the SEC issues a Wells Notice, it signals an intention to bring charges against an entity. However, the recent communication from the regulatory body shows that Robinhood Crypto is clear and has nothing to worry about.
Dan Gallagher, Robinhood’s Chief Legal Officer (CLO) has reacted to the SEC notice. Gallagher maintained the case ought not to have been opened in the first place. Gallagher strongly criticizes the SEC, emphasizing that Robinhood Crypto has always complied with federal securities laws.
The Robinhood Crypto CLO insisted that the exchange has never facilitated securities transactions and any action by the SEC would have failed. This is because, unlike other platforms, it has made conscious efforts to offer products the regulator does not sanction.
For instance, Robinhood complied with Europe’s Market in Crypto Assets (MiCA) regulation by offering compliant services in key markets. As part of the compliance move, Robinhood expanded into Spain, launching a trading app to cater to users in the region.
The former SEC Chair Gary Gensler, had tagged certain products as securities. However, many analysts believe that the new acting SEC Chair Mark Uyeda is doing a good job in taking a fairer and more transparent approach under the new administration.
Robinhood has argued that the SEC should develop a shift from “regulation by enforcement” to clear structured regulations. The regulation-by-enforcement approach was notable, with Gensler at the helm of affairs.
However, more regulatory clarity is already taking shape under the President Donald Trump administration. During his campaign, Trump promised a pro-crypto approach to digital assets.
Interestingly, after President Trump’s victory in last year’s election, Robinhood’s CLO Gallagher was named among the top choices to replace Gensler. The speculations came from a deep dive into Gallagher’s experience, who served as a Republican SEC commissioner under the Obama administration between 2011 and 2015.
While President Trump nominated Paul Atkins as Gensler’s successor, the optimism regarding crypto policy changes remains.
In terms of performance, Robinhood, in the fourth quarter, made $672 million in transaction-based revenue. The report shows that approximately half of Robinhood’s $672 million was linked to the staggering 700% rise in crypto trading when Bitcoin surged to $100,000.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
