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Robinhood warns that the feds could penalize the company for crypto tokens traded on the platform
Retail trading platform Robinhood Markets said Monday that it received a notice of enforcement action from the Securities and Exchange Commission on May 4 Crypto tokens traded on its platform.
The company said they had received a so-called “Wells notice,” which the SEC issues when it intends to take enforcement action against them. Such warnings do not necessarily mean that the company is involved in illegal acts.
“We firmly believe that the assets listed on our platform are not securities, and we look forward to working with the SEC to clarify how weak any case against Robinhood Crypto would be,” Dan Gallagher, head of legal, compliance and corporate affairs at Robinhood, said said.
The SEC adopted a tough stance towards the digital currency sector, claiming that most cryptocurrency tokens are securities and subject to its registration rules, while cryptocurrency companies have accused it of overreaching. The regulator declined to comment on the enforcement action notice.
Coinbase, the world’s largest publicly traded cryptocurrency exchange, has also previously argued that cryptocurrencies, unlike stocks and bonds, do not meet the definition of securities, a position held by the vast majority of the cryptocurrency industry.
The SEC is engaged in a legal battle against Coinbase. Last year, the cryptocurrency exchange said facilitated exchange of at least 13 cryptographic tokens which was supposed to be registered as securities and was illegally operating as a national stock exchange, broker and clearing agency without registering with the regulator.
Robinhood Crypto allows customers to deposit and withdraw cryptocurrencies to and from its custody platform and also routes customer orders to liquidity providers based on the lowest price. He has been trying to register with the SEC for almost two years.
Last year it removed digital tokens Solana, Cardano and Polygon from its platform.