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Robinhood Faces SEC Wells Notice for Securities Law Breach: Impact on Crypto Trading (BTC & ETH)
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Robinhood Markets Inc. is the latest crypto trading platform to receive a threat of legal action from the Securities and Exchange Commission (SEC).
The company disclosed in a Form 8-K that it received a Wells Notice from the SEC on May 4.
The SEC staff has reached a “preliminary determination” to recommend the agency to file a lawsuit against Robinhood for alleged violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934.
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Robinhood Markets Inc. faces potential legal action from the SEC, adding to the growing list of crypto trading platforms under scrutiny. The SEC staff has made a preliminary determination to recommend filing a lawsuit against Robinhood for alleged violations of the Securities Exchange Act of 1934.
Allegations Against Robinhood
The SEC staff disclosed that they’d reached a “preliminary determination” to recommend the agency to file a lawsuit “alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934.” Section 15(a) makes it unlawful for broker-dealers to effect or induce the purchase or sale of securities unless that broker is registered with the SEC. Meanwhile, Section 17A pertains to defrauding customers of their money through material misstatements or omissions. Remedies may include “an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and censure, revocation, and limitations on activities,” the filing stated.
Robinhood’s Response
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Robinhood expressed disappointment with the SEC’s decision after “years of good faith attempts” to comply and register.