Popular retail brokerage Robinhood was served a subpoena over its crypto listings and custody services.
In a recent 10-K filing, Robinhood disclosed that it had received subpoenas from the California Attorney General’s Office seeking information about crypto matters. Specifically, investigators requested details about the platform’s operations, custody of crypto accounts and coin listings.
Robinhood also received an investigative subpoena from the U.S. Securities and Exchange Commission (SEC) in December, after the bankruptcies of Three Arrows Capital, Voyager Digital, Celsius and FTX.
The SEC sought information about Robinhood’s crypto listings, custody services and platform operations.
“Any particular cryptocurrency’s status as a “security” is subject to a high degree of uncertainty and if we have not properly characterized one or more cryptocurrencies, we might be subject to regulatory scrutiny, investigations, fines, and other penalties,” said Robinhood.
The firm, which offers 18 cryptocurrencies on its platform, went on to note that in the event that the SEC determines a cryptocurrency is a security, it would be forced to end support for those assets altogether.
SEC Chair Gary Gensler has made his stance on classifying cryptocurrencies as securities fairly clear. In a Feb. 23 interview with New York Magazine, Gensler implied that “everything other than Bitcoin” is essentially a security and falls under the purview of the securities regulator.
In his view, these tokens are securities at the core, because of a group of middlemen involved in the offering that are anticipating profits.
Gensler in @NYMag on crypto:
-everything is a security except bitcoin
-every company out there is in violation
-crypto is pointless but blockchain is kinda neat
Hard to argue you’re acting in good faith if admittedly trying to stamp out an entire industry. pic.twitter.com/Ozw8ZJ3ETO
— Alexander Grieve (@AlexanderGrieve) February 26, 2023
His comments drew criticism from the crypto community, particularly lawyers in the digital asset space.
“Chair Gensler may have prejudged that every digital asset aside from bitcoin is a security, but his opinion is not the law,” said Jake Chervinsky, chief policy officer at the Blockchain Association.
Delphi Labs’ legal counsel Gabriel Shapiro thinks it is time to start asking what the plan is, considering registering with the SEC is too expensive for most token creators.
so, what is the plan here?
since registration is not feasible, it can only be #2–everyone pays huge fines, stops working on the protocols, destroys all dev premines, and delists token from trading
that would mean 12,305 lawsuits and wiping out $663B in value from the market
— _gabrielShapir0 (@lex_node) February 26, 2023