The cryptocurrency unit of the American financial services company Robinhood is now in the clear as the Securities and Exchange Commission (SEC) has closed its investigation into the business.
According to a blog post by Robinhood, the SEC revealed in a letter dated February 21 that it had wrapped up its investigation into the firm’s crypto operations and did not intend to bring any enforcement action against the company.
SEC Closes Investigation Against Robinhood
Recall that the SEC hit Robinhood with a Wells Notice in May 2024, indicating a threat of legal action over the firm’s alleged securities violations.
CryptoPotato reported that Robinhood had allegedly violated Sections 15(a) and 17A of the Securities Exchange Act of 1934, which prohibited the company from inducing the sale of securities unless registered with the SEC and defrauding customers of their money through material omissions or misstatements.
Possible remedies for the charges, if filed, included disgorgement, civil money penalties, a cease-and-desist order, and limitations on activities. The Wells Notice came 15 months after the SEC sent an investigative subpoena to Robinhood regarding its crypto operations.
While responding to the agency’s actions last year, Robinhood said it was disappointed because it had made attempts to register its business and comply with the agency’s regulations. Regardless, the company insisted that the SEC’s case was weak because the assets on its platform were not securities.
In the recent blog post announcing the Commission’s latest decision, Robinhood maintained that it had made difficult choices to delist certain assets classified as securities under the former SEC chair Gary Gensler, even though it disagreed with the argument that most crypto transactions were subject to federal securities laws.
Robinhood Maintains Innocence
Nevertheless, the company acknowledged the transition from a period of regulation by enforcement to a time of “regulation by regulation.” Crypto market participants will be provided with a clear regulatory framework, as promised by President Donald Trump during his election campaign.
“We applaud the staff’s decision to close this investigation with no action. Let me be crystal clear—this investigation never should have been opened. Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities,” Robinhood’s chief legal officer Dan Gallagher said, adding “As we explained to the SEC, any case against Robinhood Crypto would have failed.”
Meanwhile, Robinhood is not the only crypto company getting pardoned by the SEC. The securities agency has paused its lawsuit against the crypto exchange Binance and intends to withdraw a similar case against the trading platform Coinbase.
