Robinhood Markets Inc. (NASDAQ:HOOD) disclosed in a regulatory filing on Monday that it has received a formal warning from regulators regarding potential enforcement action related to its cryptocurrency operations.
The warning, known as a Wells notice from the US Securities and Exchange Commission, specifically pertains to Robinhood Crypto and various aspects of its cryptocurrency business, including listings, custody procedures, and platform operations.
According to the filing, the SEC’s staff informed Robinhood that they have made a “preliminary determination” to recommend that the SEC pursue enforcement action against the company.
Potential outcomes of this action could include an injunction, a cease-and-desist order, disgorgement of profits, and other penalties or restrictions on business activities.
Robinhood stated that it had previously received a subpoena related to the investigation and has cooperated with the SEC throughout the process.
It’s important to note that a Wells Notice provides the company with an opportunity to respond to the SEC’s allegations, and the issuance of such a notice does not necessarily guarantee that enforcement action will ultimately be taken.
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