Crypto retail trading platform Robinhood Markets has received a notice of enforcement action, a Wells notice, from the US Securities and Exchange Commission (SEC) regarding crypto tokens traded on its platform.
Sent on May 4, the notice, known as a "Wells notice," indicates that the SEC is considering taking enforcement action against Robinhood.
However, it's important to note that receiving a Wells notice does not imply wrongdoing on the part of the company.
Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California.
"We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be," Dan Gallagher, chief legal, compliance and corporate affairs officer at Robinhood, said, according to Reuters.
The SEC has taken a firm stance on the digital currency sector, contending that most cryptocurrency tokens qualify as securities and must adhere to its registration regulations.
However, crypto firms have accused the SEC of exceeding its authority.
"If necessary we will use our resources to contest this matter in the courts," Robinhood CEO Vlad Tenev said in a post on X.
Coinbase, the world's largest publicly traded cryptocurrency exchange, has maintained that crypto assets, unlike stocks and bonds, do not fall under the definition of securities, a position supported by much of the crypto industry.
The SEC is currently embroiled in a legal battle with Coinbase.
Meanwhile, Robinhood Crypto allows customers to deposit and withdraw cryptocurrencies to and from its custodial platform. It also directs customer orders to liquidity providers based on the best price available.
The platform has been striving to register with the SEC for nearly two years.
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