- The SEC is targeting Robinhood’s crypto division in new enforcement actions.
- Industry legal experts have questioned the SEC’s broader actions as abusive.
- The firm has expressed disappointment with the commission’s approach to regulations.
Over the past year, the United States Securities and Exchange Commission (SEC) has been on a regulatory attack streak against crypto service providers, engaging in battles with major entities such as Binance, Coinbase, Ripple, and more. The latest target of the commission’s regulatory scrutiny is the retail crypto trading platform Robinhood, which was recently served a Wells notice as a prelude to a potential enforcement action.
However, the commission’s enforcement actions have once again sparked criticism of its approach to industry regulations.
SEC vs Robinhood: Crypto “Carpet Bombing Campaign”
Commenting on the SEC’s notice against Robinhood’s crypto division, Cooley LLP legal counsel and former Paradigm executive Rodrigo Silva-Herzog asserted that the move is the latest in the commission’s streak of aggressive “carpet bombing” campaigns against the industry.
Sponsored
Silva-Herzog emphasized Rohbinhood’s CEO, Dan Gallagher’s former position as an ex-US President OBAMA-appointed SEC commissioner, emphasizing that the present SEC chair, Gary Gensler, may have taken on a significantly stronger legal battle than he can handle.
Echoing the sentiment, Variant Fund Chief Legal Officer Jake Chervinsky condemned the SEC for abusing the Wells notice as a scare tactic against crypto firms. He asserted that the number of notices sent about crypto in recent months is astonishing, raising questions about how the commission can launch so many enforcement actions at once.
Chervinsky and Silva-Herzog’s assertions align with Robinhood’s response to the SEC’s actions.
Robinhood CLO Condemns SEC
In a blog post on Monday, May 6, CLO Dan Gallagher expressed disappointment with the regulatory commission for disappointed that the agency’s actions,
Sponsored
“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business.”
Spotlighting its compliance actions, the firm reiterated past “difficult choices” not to list products flagged by the commission as securities in public actions against other platforms, including its efforts to register as a special purpose broker-dealer with the agency.
Robinhood emphasized its belief that its offerings are not securities, expressing readiness to “demonstrate how weak any case” against the firm by the SEC would be on both the facts and the law.
On the Flipside
- In the wake of the news, Robinhood tanked a sharp 5% in the premarket.
- On April 11, the SEC issued a similar notice to the decentralized exchange Uniswap.
- The SEC is still locked in legal battles against exchanges and projects, including Coinbase and Ripple.
Why This Matters
While the SEC’s notice against Robinhood’s crypto division hasn’t yet escalated into a legal battle, it mirrors the pattern of aggressive enforcement actions seen in previous cases, which has often resulted in prolonged legal battles and hefty sanctions.
Read this article to understand how the past actions have brought backlash to Chair Gensler:
“Fire Gary Gensler!” Lawmakers Endorse Act to Oust SEC Chair
The Sui Network has addressed recent FUD about its token supply; read more:
Sui Network Dispels ‘Shady’ Token Supply Allegations
