The Digital Chamber slams SEC for issuing Wells Notice against Robinhood

The Digital Chamber, a crypto trade association, condemned the SEC for submitting a Wells notice to Robinhood Crypto.

In a statement on May 6, the association expressed “profound disappointment and concern” over the action and called it an example of regulatory overreach.

The Digital Chamber emphasized its ongoing opposition to the SEC extending its reach without authorization from Congress. It noted that Congress is “actively deliberating legislation” to define regulatory jurisdiction over crypto and said the SEC has violated the process.

To address jurisdictional issues, the Digital Chamber urged for “immediate legislative action” and said SEC Chair Gary Gensler should be compelled to testify before Congress.

Support for companies and investors

The Digital Chamber defended Robinhood, acknowledging the firm’s self-proclaimed good-faith compliance efforts and attempts to register with the SEC.

The association said:

“The Digital Chamber stands ready to support Robinhood Crypto and other affected companies… “

It did not explicitly describe plans to submit an amicus brief in defense of Robinhood but said it had done so in other cases in the past, highlighting its submission in Kraken’s case in February.

The Digital Chamber further asserted the SEC’s actions are at odds with the regulator’s investor protection mandate, noting that aggressive enforcement harms new companies and reduces investors’ ability to make autonomous financial decisions.

Robinhood Crypto received Wells notice

Robinhood disclosed in a May 4 SEC filing that its subsidiary, Robinhood Crypto, received a Wells notice. It commented further on the development in a May 6 post.

The Wells notice indicates the SEC intends to recommend enforcement action against Robinhood. However, the SEC has not yet filed a lawsuit.

Robinhood nevertheless described how it might oppose the SEC’s intentions. The company said it intends to engage with the SEC to show the weakness of any case in terms of the facts and the law. It also asserted the assets it lists are not securities.

Robinhood said it will continue to offer its crypto-related services.

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