The SEC Can’t Stop Suing Crypto Companies – TradingView News

The SEC Can't Stop Suing Crypto Companies - TradingView News

SEC to Sue Robinhood for Alleged Securities Violations

Robinhood, one of the world’s leading fintech firms, has recently received a notice from the U.S. Securities and Exchange Commission (SEC) that the agency is building a case and intends to sue. The SEC has accused Robinhood of alleged securities violations, which the company denies. The law firm noted in a statement that the firm has been in direct communication with the SEC over its crypto offerings for years, which is what you’d expect from a firm that only dabbles in crypto.

What is a Wells Notice?

A Wells notice is a notification from the SEC’s enforcement division that they are planning to sue a firm or individual for securities violations, giving them the opportunity to present evidence of their innocence. A Wells notice is the last chance the accused has to convince regulators that they didn’t break the law, although the vast majority of these letters end up in a lawsuit.

SEC’s Anti-Crypto Actions

It’s hard to be surprised by the SEC’s anti-crypto actions, which the agency has dramatically increased since coming into office in 2021. SEC Chair Gary Gensler has made it his business to rein in the crypto industry, which he believes is under his remit, despite being an arguable contention. The SEC now spends a disproportionate amount of time and money pursuing legal challenges against crypto firms of all sizes.

Robinhood’s Compliance Efforts

Robinhood has been trying to comply with U.S. regulators for years, exactly what’s needed when dabbling in crypto, as noted by Dan Gallagher, the company’s legal, compliance, and corporate lead. The firm has attempted to reach regulatory clarity with regulators by involuntarily delisting some tokens, including Solana, Polygon, and Cardano, in response to previous SEC lawsuits against rival trading firms. In particular, the firm has engaged in years of good faith attempts to work with the SEC for regulatory clarity and attempted to register itself as a special-purpose broker-dealer with the SEC.

SEC Misusing Wells Process

Variant Fund legal lead Jake Chervinsky said that the number of Wells notices sent by the SEC concerning crypto in recent months is staggering. The SEC seems to be misusing the Wells process as a scare tactic and abusing the process to signal that crypto is essentially lawless, which is not entirely their fault, but also that Congress slept on crypto regulation for over a decade and is now hampered by partisan gridlock, according to Beau J. Baumann, a Ph.D. candidate at Yale Law School and co-author of an influential crypto law paper.

SEC’s Future Actions and Court Rulings

The SEC has filed at least one lawsuit per month since November 2020 against a crypto company, with most of these going unnoticed and ending in a settlement. While the SEC has had legal victories, it has also suffered many court losses. It’s unclear whether Robinhood will get sued, although its stock dipped in pre-market trading. If the SEC wins and Robinhood gets sued, it remains to be seen whether it will mount its offensive legal campaign. However, even if the SEC wins, preventing people from trading Stellar lumens or dogecoin is unlikely to benefit anyone.

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