The Securities and Exchange Commission (SEC) is currently investigating Robinhood Crypto, LLC, an exchange platform.
The investigation, as announced on Monday, includes inquiries into crypto listings, custody of cryptocurrencies, and platform operations. Robinhood Crypto, LLC, has also received a Wells Notice from the SEC, alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934.
The Wells Notice, disclosed in court filings on May 4, indicates that the SEC’s investigation has concluded, detailing the alleged violations found by the regulator. The SEC is specifically investigating Robinhood’s crypto listings and custodian operations, hinting at potential enforcement actions for alleged violations of the Securities Act.
In response, Robinhood has expressed disappointment in a blog post, stating that it had tried to collaborate with the SEC for regulatory clarity, but those efforts were unsuccessful.
The SEC’s allegations against Robinhood include violations of Section 15(a), which deals with a broker’s registration with the regulator, and Section 17A, which pertains to the requirements for registered transfer agents, including processing securities transfers, safeguarding investor and issuer funds and securities, and maintaining records of investor ownership.
The SEC’s potential actions could include a civil injunctive action, such as a trial, a cease-and-desist proceeding, as well as penalties and restrictions on the exchange’s activities.