After FTX and Binance, the US SEC sets its sights on Robinhood, causing Bitcoin to fall in response

The U.S. Securities and Exchange Commission (SEC) has once again taken action against a cryptocurrency trading platform, this time targeting the U.S. brokerage and cryptocurrency trading platform Robinhood.

On Monday, the news of SEC issuing a Wells notice to Robinhood caused a seismic shock in the cryptocurrency circle, with Bitcoin plummeting from $65,500 to around $63,200 directly, and even Robinhood's stock price briefly dropping by 2.5%.

Over the past two years, the SEC has been tightening regulations on cryptocurrencies, causing fear among cryptocurrency investors. SEC has successively filed civil lawsuits against cryptocurrency trading platforms such as FTX, Binance, and Coindesk, imposing fines totaling over $5 billion. It seems that Robinhood may also face a similar fate this time, as civil litigation is expected to follow soon after the Wells notice was delivered.

According to legal documents, the notice was issued by the SEC on May 4th, mainly targeting Robinhood's cryptocurrency listing and custody business, which violated Section 15(a) and Section 17A of the U.S. Securities Exchange Act of 1934 (as amended).

Dan Gallagher, Chief Legal Officer of Robinhood, stated, "We firmly believe that the assets listed on the Robinhood platform are not securities and look forward to communicating with the SEC to demonstrate that any case against Robinhood's cryptocurrency is factually and legally unfounded."

Gallagher reassured Robinhood's customers that the Wells notice will not affect their accounts or services, and Robinhood's cryptocurrency business will continue to operate.

Issuing Wells notices to cryptocurrency platforms seems to have become a standard practice for the SEC. Jake Chervinsky, Chief Legal Officer of Variant, pointed out that the SEC appears to be abusing Wells notices as a form of intimidation.

"The number of notices issued by the SEC against cryptocurrency platforms in recent months is shocking. It's hard to imagine them being able to bring so many enforcement actions simultaneously. SEC is pouring a lot of resources into the crypto space, neglecting its true mission of regulating the stock and bond markets."