SEC issues Wells notice to Robinhood Crypto

Robinhood Markets Inc. received a Wells notice from the U.S. SEC warning of possible enforcement regarding its crypto operations.

SEC staff issued a preliminary ruling recommending that the agency take enforcement action against Robinhood Crypto over its cryptocurrency listings, custody practices and platform operations, according to a regulatory filing filed Monday.

Possible consequences include injunctive relief, cease and desist orders, damages, and other penalties or operational limitations as specified in the application. Robinhood previously said it received a subpoena and has since cooperated with the SEC’s investigation.

The Wells notice allows companies to challenge the SEC’s allegations before the agency initiates enforcement actions. However, notification does not guarantee official action.

Robinhood Crypto has recently come under increased regulatory scrutiny as U.S. authorities intensify focus on the booming cryptocurrency industry.

Laura Brookover, a former CFTC enforcement official and current Consensys attorney criticized The SEC’s approach and focus have been questioned.

“Aren’t there real securities violations that the SEC should be focusing on?” he asked in a post on X.

As of 9 a.m., shortly after markets opened, Robinhood’s shares were down 5% after the agency announced the subpoena.