SEC Enforcement Continues: Following Uniswap and Consensys, Robinhood Receives Wells Notice

Robinhood Crypto, the cryptocurrency division of the US online brokerage Robinhood, received a Wells Notice from the US Securities and Exchange Commission (SEC) on May 4. This marks the third cryptocurrency-related company to receive such a notice, following Uniswap and Consensys in April, indicating that the SEC staff has preliminarily decided to recommend enforcement action against the company for alleged violations of securities regulations.

SEC accuses Robinhood of violating securities regulations
Uniswap and Consensys also recently received Wells Notices
In a statement, Robinhood stated that the SEC staff has preliminarily decided to recommend enforcement action against its cryptocurrency division, accusing it of violating securities regulations.
Dan Gallagher, Chief Legal, Compliance and Regulatory Officer of Robinhood Markets, stated:
Over the years, we have sincerely attempted to work with the SEC to increase regulatory transparency, but we are disappointed with the agency’s decision to issue a Wells Notice related to our US cryptocurrency business.
Shortly after Robinhood filed for bankruptcy at the cryptocurrency exchange FTX in November 2022, it received a subpoena from the SEC. The subpoena aimed to provide information on topics such as “cryptocurrency listings, cryptocurrency custody, and platform operations.”
Robinhood Crypto has since made several concessions, including not listing certain tokens or offering products such as lending and staking (which the SEC has publicly deemed securities for other platforms). Additionally, Robinhood has attempted to register a special purpose broker-dealer with the SEC.
Last month, decentralized cryptocurrency exchange Uniswap received a Wells Notice from the SEC. Uniswap founder Hayden Adams expressed disappointment at the time, stating that the SEC is not committed to developing clear, informed rules, but rather decided to focus on attacking long-standing participants like Uniswap and Coinbase while letting bad actors like FTX slip away.
(
Uniswap receives Wells Notice, founder vows to fight SEC to the end
)
Consensys, an Ethereum infrastructure developer, also received a Wells Notice from the SEC in April and decided to proactively sue the SEC. The lawsuit revealed that the SEC had been investigating Consensys’ product MetaMask for years. Consensys argues that regulating Ether as a security would jeopardize the ability to use Ethereum and other blockchains in the US, and if the value and belief in Ethereum as a decentralized platform are destroyed, it could lead to massive layoffs in the US cryptocurrency industry.
(
Consensys sues SEC, supports Ethereum, highlights “four reasons” why ETH is not a security
)
ConsenSys
Robinhood
SEC
Uniswap
Wells notice