SEC Staff Send Wells Notice to Robinhood: Details

Bloomberg Terminal on the X app has just reported that the major investment platform Robinhood, which offers its customers both traditional shares and crypto, received a Wells Notice from the staff of the American Securities and Exchange Commission. The notice was issued on May 4, according to Street Insider.

The regulator’s staff has made a ““preliminary determination” to recommend that an enforcement action should be taken by the SEC against Robinhood. The charges seem to be the same made by the SEC against Coinbase and other cryptocurrency platforms recently – a violation of the Securities Exchange Act of 1934 – basically, from their point of view Robinhood offers its customers crypto assets which the SEC labels as unregistered securities.

In December 2022, the crypto trading platform already received an investigative subpoena from the SEC regarding its cryptocurrency listings, crypto custody and overall platform operations.

Currently, the only cryptocurrency that the SEC names a commodity is Bitcoin. Ethereum also carries this status so far but recently there have been multiple hints from the SEC chairman Gary Gensler that the second largest crypto might lose its commodity immunity and be deemed a security along with the rest of altcoins.

Still, in June last year, the SEC partly lost a case to Ripple when the judge ruled that XRP sales on secondary markets are not qualified as security sales.