Robinhood Under Fire: SEC Threatens Charges Over Crypto Trading Platform
The Securities and Exchange Commission (SEC) has threatened to charge Robinhood’s cryptocurrency arm with alleged violations of federal laws governing securities brokers. This move marks the latest round of SEC scrutiny for Robinhood and the latest action against a crypto trading platform.
“We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.” - Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer
The SEC has been cracking down on crypto trading platforms
The SEC has been cracking down on the largely unregulated crypto trading world in recent years. Popular crypto trading platforms, including Binance, FTX, and Coinbase, among others, have all faced enforcement actions, including SEC lawsuits and criminal charges in some cases. At the heart of many of these actions is regulators’ argument that many digital currencies are securities, meaning crypto brokers must register with the SEC and follow securities laws. However, cryptocurrency platforms have largely argued that the digital assets they specialize in are not securities.
Baiju Bhatt and Vlad Tenev, co-founders of Robinhood
Robinhood co-founders Baiju Bhatt and Vlad Tenev are estimated to be worth $1.2 billion and $1.1 billion, respectively. The company is known for offering zero-fee trading, making it popular among younger retail traders. However, some critics allege that it has allowed inexperienced users to make risky investments they don’t fully understand.
Crypto trading platforms have faced increased scrutiny from regulators
The SEC’s notice to Robinhood Crypto is the latest in a series of actions against crypto trading platforms. As regulators continue to crack down on the largely unregulated crypto trading world, it remains to be seen how this will impact the industry as a whole.
