The Securities and Exchange Commission (SEC) might take legal action against Robinhood over its cryptocurrency operations.
In a filing on Monday, CNBC reported that Robinhood disclosed the SEC's warning indicating potential charges after completing an investigation.
Specifically, the SEC focuses on Robinhood's cryptocurrency operations, including listings, custody, and platform activities. Robinhood had previously received subpoenas from the SEC related to its crypto business, and now the SEC has indicated that it may recommend filing an enforcement action against Robinhood.
The alleged violations are Sections 15a, registration and regulation of brokers and dealers in securities, and 17a, clearance and settlement of securities transactions, of the Securities Exchange Act of 1934.
SEC's warning is similar to actions taken against other crypto exchanges like Coinbase, Binance, and Kraken.
Robinhood Crypto's Response to SEC
Robinhood expressed disappointment over the SEC's decision to issue a warning related to its U.S. crypto business. The crypto company also underlined its efforts to collaborate with the SEC for regulatory clarity, including attempts to register.
Robinhood firmly believes that the assets listed on its platform are not securities and looks forward to engaging with the SEC to clarify its stance.
This news has led to a temporary drop in Robinhood's stock price. Although it has rebounded for now, its long-term outlook depends on market performance and investor sentiment toward digital assets.
Coinbase, which also received an SEC complaint last year, recovered from its stock decline.
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