Robinhood, a popular retail stock and crypto trading service, has received a Wells notice from the US Securities and Exchange Commission (SEC).

The company said it received the notice on May 4 in an SEC filing.

The notice means that SEC staff have made a preliminary determination to recommend an enforcement action against Robinhood’s cryptocurrency subsidiary, Robinhood Crypto. The SEC could seek various injunctions, penalties and fines, and a cease-and-desist order through its civil lawsuit.

Robinhood also acknowledged the SEC’s earlier investigative subpoenas and said that it cooperated with those investigations.

Executive Statements

In a company statement, Robinhood CLO Dan Gallagher expressed disappointment, noting that Robinhood has engaged in good faith cooperation with the SEC for years and has attempted to register with the agency.

On X, Robinhood CEO Vlad Tenev commented broadly on SEC enforcement:

“Over the last three years, we’ve reached a state of regulatory onslaught … The SEC’s continued attack on crypto … mark[s] yet another improper attempt by the administrative state to stifle innovation.”

Tenev acknowledged the possibility of a legal defense, stating: “if necessary we will use our resources to contest this matter in the courts …”

Robinhood believes that the assets that it lists are not securities.

The company said it has opted not to offer certain tokens and products, such as lending and staking, that the SEC has alleged are securities in other cases.

In June 2023, Robinhood delisted several assets, including Cardano (ADA), Polygon (MATIC), and Solana (SOL), which the SEC alleged are securities in other cases. The company did not refer to specific delistings in its latest announcement.

Similar Cases Abound

Robinhood Crypto is not the only crypto company that faces SEC action. Two Ethereum ecosystem firms, Uniswap and Consensys, disclosed receiving such notices in April. The SEC has also subpoenaed multiple firms that have worked with the Ethereum Foundation, according to a Fortune report.

Additionally, throughout 2023, the SEC launched securities lawsuits against top crypto exchanges, including Coinbase, Binance, and Kraken.

The above cases are just part of the agency’s ongoing enforcement efforts. The SEC’s website lists about 150 crypto asset and cyber enforcement cases, the majority of which began in 2019 or later.