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- The U.S. Securities and Exchange Commission (SEC) is reportedly threatening to sue cryptocurrency brokerage platform Robinhood, raising concerns within the crypto law community.
- Notable figures in the crypto law community accuse the SEC of overstepping its bounds with its recent pressures on crypto companies.
- The criticisms came after Robinhood announced that it had received a Wells Notice from the SEC regarding cryptocurrencies.
As the SEC threatens to sue Robinhood, the crypto law community reacts with accusations of overreach. This article delves into the implications of this development for the crypto industry.
SEC’s Increased Pressure on Crypto Companies
Leading figures in the crypto law community have expressed their concern over the SEC’s recent actions. Jake Chervinsky, Chief Legal Officer at Variant Fund, voiced his surprise at the number of Wells Notices the SEC has recently issued to crypto companies. He accused the SEC of misusing the Wells process as a scare tactic.
Accusations of Disproportionate Focus on Crypto Industry
Chervinsky continued to criticize the SEC for disproportionately focusing its efforts on the crypto industry instead of the stock and debt markets. He warned that if the SEC were to carry out as many enforcement actions as it has sent Wells Notices, it would be “clearly violating both the law and Congressional authority.” Otherwise, he argued, it is “clearly abusing the Wells process to gather information for free and terrorize honest U.S. companies.”
Questioning SEC’s Ongoing “Bombardment Campaign” Against Crypto
Rodrigo Silva-Herzog, a special advisor at Cooley LLP and former special advisor at Paradigm, echoed Chervinsky’s sentiments. He questioned whether SEC Chairman Gary Gensler had overstepped his bounds with his ongoing “bombardment campaign” against crypto.
Robinhood’s Announcement of SEC’s Planned Enforcement Action
The discussion arose after Robinhood announced on Monday, according to the SEC’s Form 8-K filing, that the SEC planned to bring an enforcement action against the company’s crypto unit for alleged securities violations. Gary DeWaal, a senior attorney at Katten Muchin Rosenman LLP, commented in an interview that this is the latest in a series of new Wells Notices that seem to cover a broad range of different types of actions, all related to the crypto space.
Conclusion
The SEC’s threat to sue Robinhood has sparked a debate within the crypto law community, with accusations of overreach and misuse of the Wells process. As the SEC continues its scrutiny of the crypto industry, companies and legal experts alike will be watching closely to see how these developments unfold.