Digital Chamber, a crypto trade association, has strongly criticized the US Securities and Exchange Commission (SEC) for issuing a Wells Notice to Robinhood Crypto, calling it a concerning development. The Chamber argues that this is another example of the SEC’s excessive regulatory overreach, similar to previous instances where Wells Notices were issued to major industry players like Uniswap and Consensys. A Wells Notice is a notification from the regulator indicating that an investigation has been concluded and an enforcement action is planned.
In response to the Wells Notice, Robinhood expressed its disappointment, emphasizing its strong compliance efforts and its attempts to work with the SEC for regulatory clarity. The Chief Legal Officer at Robinhood, Dan Gallagher, stated that the agency’s decision to issue a Wells Notice related to their US crypto business was unexpected and disheartening.
The Digital Chamber agrees with Robinhood’s response, stating that the SEC’s actions undermine innovation and investor protection in the crypto space. The Chamber believes that the SEC’s aggressive stance goes beyond its mandate for investor protection and has called for legislative action to address these discrepancies and provide clarity in the regulatory framework. The Chamber also demands an explanation from SEC Chair Gary Gensler regarding the agency’s continued efforts to suppress the crypto industry.
Experts in the crypto industry have also expressed concerns about the SEC’s use of Wells Notices. Jake Chervinsky, Chief Legal Officer at Variant Fund, criticized the SEC for potentially violating the law and its Congressional mandate if it brings as many enforcement actions as it has sent Wells Notices. He suggests that the SEC may be abusing the Wells process for free discovery and to intimidate US companies. Adam Cochran, from Cinneamhain Ventures, described the Wells Notice targeting Robinhood as another misstep by the SEC.
Overall, there is growing criticism of the SEC’s actions, with calls for transparency, legislative action, and a reevaluation of the agency’s approach to the crypto industry.
