Prominent retail trading platform Robinhood Markets has revealed plans to challenge the U.S. SEC in court over securities allegations.
Robinhood’s CEO and co-founder Vlad Tenev disclosed this yesterday, shortly after the company received a Wells Notice from the securities regulator.
SEC Issues Wells Notice to Robinhood
For context, Robinhood became the latest crypto-related trading platform to come under the radar of the SEC’s scrutiny, a trend which the broader cryptocurrency community has vehemently condemned.
Robinhood revealed that it received a Wells Notice from the SEC, suggesting that the regulator plans to bring an enforcement action against the firm.
The SEC typically sends a Wells Notice to officially notify a company of its plans to bring an enforcement action and to inform it about its involvement in a completed securities-related investigation.
Robinhood Conservative Listing Approach
Expectedly, the development surprised the crypto community, given that Robinhood has followed a conservative approach when listing crypto assets. Unlike most trading platforms, Robinhood currently supports only 15 crypto assets.
They include Bitcoin, Ethereum, Shiba Inu, Dogecoin, USD Coin, Avalanche, Bitcoin Cash, Chainlink, Litecoin, Uniswap, Ethereum Classic, Stellar Lumen, Aave, Tezos, and Compound.
Robinhood takes a conservative approach to ensuring it does not support crypto assets deemed securities. The trading platform constantly modifies its list of supported cryptos, removing assets involved in securities litigation.
This is evident in the delisting of Polygon, Solana, and Cardano, which came shortly after the SEC labeled them securities in its lawsuits against Binance and Coinbase.
Despite following this careful approach in listing tokens, the SEC still issued a Wells Notice to the firm, suggesting that a lawsuit is imminent.
Robinhood Plans to Contes Matter in Court
Notably, Robinhood’s co-founder said the company will contest the matter in court on behalf of its customers, with the aim of protecting its crypto business and fostering regulatory transparency in the United States.
While we strive to maintain positive and productive relationships with our regulators, if necessary we will use our resources to contest this matter in the courts, with the intent of both defending our crypto business and establishing regulatory clarity in the United States for…
— Vlad Tenev (@vladtenev) May 6, 2024
Tenev described the SEC’s regulatory onslaught in the U.S. as an improper attempt to stifle innovation in the country.
SEC Seeks Control Over Crypto
Meanwhile, industry pundits claim the SEC has sought complete control over the crypto industry by alleging that most assets are securities subject to federal laws. So far, the SEC has given the securities tag to Binance Coin, Solana, Cardano, and Polygon, among others.
Despite declaring Ethereum as a non-security in 2018, reports suggest that the SEC is investigating certain ETH-related transactions to determine whether they constitute investment contracts.
Interestingly, top industry stakeholders have criticized the SEC’s attempt to elevate itself as the suitable regulator for crypto. As a result, they characterized the efforts as gross overreach.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
