Robinhood steering clear of SEC troubles
Robinhood is reviewing its cryptocurrency offerings following the US Securities and Exchange Commission (SEC) recent lawsuits against two top crypto exchanges, Binance and Coinbase.
The company is currently analysing the regulator’s suits and findings to know the best course of action.
Robinhood to delist some cryptocurrencies
According to Robinhood Markets chief legal officer Dan Gallagher the firm is weighing on its crypto offerings in line with the securities listed in the two recent lawsuits against Coinbase and Binance.
Gallagher, who is a former SEC commissioner, revealed this while testifying before the House Agriculture Committee during a meeting focused on digital assets which also had Coinbase and the CFTC present.
The financial services company is “actively reviewing” the regulator’s analysis “to determine what, if any, actions to take,” Dan Gallagher said.
Users of Robinhood have a choice of 18 crypto tokens, as the brokerage offers a more constrained selection of crypto assets than the exchanges, which feature hundreds of different digital currencies. Some of them, such as Solana, Cardano, and Polygon, are considered as unregistered securities by the SEC.
A massive outflow of major cryptocurrencies like Bitcoin and Ethereum Binance occurred on Tuesday as a result of the SEC’s crackdown. The commission is also asking the court for permission to seize cryptocurrency assets connected to Binance’s American subsidiary, Binance.us.
Robinhood may be avoiding another chance to lock horns with the SEC as the brokerage firm was ordered to pay $10M in fines earlier this year. The fine was for registering operational deficiency that adversely affected investors during the COVID-19 pandemic. In 2020, the company was fined $65M.
The New York State Department of Financial Services (NYDFS) also fined the firm $30 million last summer for breaking anti-money laundering and cybersecurity regulations.
The agency also discovered “significant failures” in the company’s compliance procedures, and it was claimed that those policies were not in line with the cybersecurity and virtual currency rules set forth by the NYDFS.
Read more: Why classifying cryptocurrencies as securities isn’t a good idea
Delisting spree?
The cryptocurrencies listed by SEC are Solana’s SOL, Cardano’s ADA, Polygon’s MATIC, Filecoin’s FIL, Cosmos’ ATOM, Sandbox’s SAND, Decentraland’s MANA, Algorand’s ALGO, Axie Infinity’s AXS, and Coti’s COTI tokens. As such, the SEC is now categorising 61 cryptocurrencies in total as unregistered securities.
It appears that other crypto exchanges may follow suit if the SEC lawsuits are successful. Though Robinhood hasn’t specifically stated that it will delist any tokens, the firm may take the charge to avoid negative regulatory pressure.
Just last December, the California-based brokerage firm was subpoenaed by the securities regulator concerning crypto listings.
“We received an investigative subpoena from the SEC regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations,” a regulatory filing of the exchange stated.
The SEC is also engaged in a lengthy legal battle with Ripple to decide the status of XRP. The SEC has maintained that the XRP is an unregistered security. Many US-focused/based crypto exchanges have since delisted XRP.
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
