Robinhood Markets receives SEC notice for alleged securities violations at crypto unit

Robinhood Markets Inc. has received a notice from the Securities and Exchange Commission about alleged securities violations at its crypto division.

The company said in a regulatory filing that it received investigative subpoenas from the SEC about issues including cryptocurrency listings, custody of cryptocurrencies, and platform operations.

Robinhood Crypto has cooperated with the investigation, the company said.

Last week the crypto division received a Wells notice from SEC staff advising the unit that a preliminary determination was made to recommend that the SEC file an enforcement action against Robinhood Crypto for alleged securities violations.

The filing said that the potential action may involve a civil injunctive action, public administrative proceeding or a cease-and-desist proceeding. Remedies that may be sought include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and censure, revocation, and limitations on activities.

“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,” Dan Gallagher, chief legal, compliance and corporate affairs officer at Robinhood Markets, said in a statement on Monday. “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 on both the facts and the law.”

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