Robinhood CEO Slams SEC’s Crypto Regulations, Vows to Fight Back in Court
Retail trading platform Robinhood Markets has announced its plans to challenge the US Securities and Exchange Commission (SEC) in court after being accused of securities violations. The company’s cryptocurrency arm, Robinhood Crypto, received a Wells Notice from the SEC, indicating that charges may be filed against the company following an investigation. CEO Vlad Tenev wasted no time in criticizing the SEC’s actions, describing them as part of a broader “regulatory onslaught” that hinders innovation and puts American firms and investors at a disadvantage.
The SEC’s investigation into Robinhood’s crypto business, including its cryptocurrency listings, custody services, and platform operations, has raised concerns about potential violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934. The enforcement action against Robinhood could involve civil injunctive measures, public administrative proceedings, and cease-and-desist orders, seeking remedies such as injunctions, disgorgement, civil money penalties, and restrictions on activities.
Robinhood Crypto had already taken steps to comply with regulatory scrutiny following the SEC’s lawsuits against Binance and Coinbase last year. The platform stopped supporting tokens that the SEC deemed to be securities, resulting in the loss of trading access for its US users to altcoins like Cardano (ADA), Polygon (MATIC), and Solana (SOL) within a few weeks.
Dan Gallagher, Robinhood’s chief legal, compliance, and corporate affairs officer, expressed disappointment with the SEC’s decision, stating that the company has made efforts to work with the agency for regulatory clarity. Gallagher believes that the assets listed on their platform are not securities and looks forward to engaging with the SEC to prove that any case against Robinhood Crypto would be weak based on the facts and the law.
Tenev emphasized that Robinhood Crypto is prepared to go to court to challenge the SEC’s actions. The SEC’s scrutiny of Robinhood Crypto is part of a larger crackdown on the crypto industry, with other prominent players like ConsenSys and Uniswap Labs also receiving warnings from the agency. Uniswap’s founder, Hayden Adams, criticized the SEC’s approach, stating that the agency is focusing on attacking reputable companies instead of creating clear and informed rules. ConsenSys, on the other hand, has taken legal action against the SEC, expressing concerns that regulating ether as a security would hinder the US’s ability to utilize Ethereum and other blockchain technologies.
Robinhood Crypto has faced previous regulatory challenges, including a $30 million settlement with the New York Department of Financial Services in 2022 and a $65 million settlement with the SEC in 2020 for misleading statements to investors. The company also received a $70 million fine from the Financial Industry Regulatory Authority in 2021, marking its largest-ever financial penalty.
