The cryptocurrency division of online broker Robinhood has received a warning from the U.S. Securities and Exchange Commission (SEC) regarding a potential lawsuit.
The notice in question is a Wells notice, a letter indicating that the agency has found violations of securities laws and that the matter may proceed to court.
“After several years of good-faith attempts to seek clarity from the SEC on regulatory matters, including our well-known attempt to ‘come in and register,’ we are disappointed to receive the notice,” the company stated.
Robinhood representatives expressed strong confidence that the crypto assets added to the platform do not qualify as securities.
“We are prepared to demonstrate to the SEC how weak any case against Robinhood Crypto would be, both factually and legally,” the press release asserts.
The news of the agency sending Robinhood a warning about a potential lawsuit emerged in March 2023. In its annual report, the online broker disclosed that the claims made in December 2022 concerned the listing of digital assets.
Robinhood shares opened trading on May 6 with a 2.6% decline, but within the first 30 minutes, they turned positive, gaining 0.72% at the time of writing.
In the fourth quarter of 2023, compared to July-September, the company’s revenue from digital asset-related transactions surged by 84% to $43 million. The company will present its first-quarter 2024 earnings on May 8.
On January 12, online broker Robinhood opened the opportunity for U.S. clients to trade spot bitcoin ETFs.
Prior to the company’s IPO in July 2021, co-founder and CEO Vlad Tenev described digital assets as the foundation of Robinhood’s future growth.
In April 2024, the online broker officially released its cryptocurrency wallet for Android users without geographical restrictions. This expansion followed the launch of the iOS version a year earlier.
In April 2024, the largest decentralized exchange Uniswap received a warning from the agency about a potential lawsuit.
Later, the Blockchain Association and the Texas Crypto Freedom Alliance challenged the SEC, accusing it of “capricious rulemaking” and “misguided attacks” on the digital asset industry.
ConsenSys filed a lawsuit against the Commission over the “regulation of ETH as a security.” The company claims the agency has “targeted” the MetaMask wallet software.