Retail trading platform Robinhood Markets (HOOD.O) said on Monday its U.S. cryptocurrency trading arm received a Wells notice from the United States Securities and Exchange Commission (SEC) on May 4.
A Wells notice does not necessarily mean that recipients have violated any law. The SEC issues Wells notices to firms when it is planning to bring enforcement action against them.
The SEC has adopted a tough stance toward the digital currency industry, especially after the high-profile collapse of now-bankrupt FTX cryptocurrency exchange, and has contended that certain crypto tokens should be registered as securities.
Crypto firms have accused the regulator of overreach. They have also warned that a hostile regulatory environment could prompt more crypto companies to move offshore.
"We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be," Dan Gallagher, chief legal, compliance and corporate affairs officer at Robinhood, said in response to the Wells notice.
The SEC declined to comment.
Robinhood Crypto enables customers to deposit and withdraw cyptocurrencies to and from its custodial platform and also routes customer orders to liquidity providers based on the lowest price.
Last year, it removed digital tokens Solana, Cardano and Polygon from its platform.
