Securities Regulation Daily Wrap Up, BLOCKCHAIN—SEC reportedly closes investigation of Robinhood Crypto, (Feb 24, 2025)
Organizations Mentioned:Coinbase, Inc. | Robinhood Crypto, LLC | Robinhood Markets, Inc.
The SEC has recently paused enforcement activities against several crypto exchanges.
The SEC has officially closed its investigation into Robinhood Crypto (RHC) with no action, according to Dan Gallagher, chief legal, compliance and corporate affairs officer at Robinhood Markets, Inc.
“Let me be crystal clear—this investigation never should have been opened,” Gallagher said in a press release. “Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities.”
“As we explained to the SEC, any case against Robinhood Crypto would have failed,” continued Gallagher, who previously served as an SEC commissioner from 2011 to 2015.
The firm previously announced it had received a Wells Notice from the SEC indicating a potential enforcement action relating to failure to register with the SEC.
The wind-down appears to reflect a newly genial view by the SEC toward crypto trading platforms, including the reported dismissal of the SEC’s enforcement action against Coinbase, Inc. and stay of its action against Binance.
SEC investigation. Robinhood Crypto offers online trading of cryptoassets including BTC, ETH, XRP, and others.
In May 2024, Robinhood announced in an 8-K filing and blog post that it had received a Wells Notice from SEC staff indicating a recommendation to file an enforcement action.
“On May 4, 2024, RHC received a ‘Wells Notice’ from the Staff of the SEC (the ‘Staff’) stating that the Staff has advised RHC that it made a ‘preliminary determination’ to recommend that the SEC file an enforcement action against RHC alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934, as amended,” the firm said in the 8-K.
In the 2024 filing, Robinhood said it had previously received investigative subpoenas from the SEC regarding cryptocurrency listings, custody of cryptocurrencies, and platform operations, among other topics.
Investigation closed. The SEC’s Enforcement Division advised Robinhood Crypto in a February 21 letter that it had concluded its investigation and did not intend to move forward with an enforcement action, according to the press release.
“We appreciate the formal closing of this investigation, and we are happy to see a return to the rule of law and commitment to fairness at the SEC,” said Gallagher.
Robinhood Crypto legal status. According to its website, Robinhood Crypto, LLC is registered with FinCEN as a money services business and licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency held through Robinhood Crypto is not FDIC insured or SIPC protected.
Other crypto enforcement. The SEC has recently sought pauses in enforcement actions against other crypto exchanges.
The SEC has agreed to drop its enforcement action against Coinbase, according to Coinbase’s CEO Brian Armstrong and Chief Legal Officer Paul Grewal.
On February 21, the Second Circuit granted the SEC an extension until March 14 to respond in Coinbase’s appeal of a March 27, 2024 federal district court ruling that certain transactions on the Coinbase platform involved investment contracts.
The SEC was also granted a joint stay until April 14 in its enforcement action against Binance.
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