Prominent cryptocurrency legal experts are expressing disapproval of the U.S. Securities and Exchange Commission’s recent surge in issuing Wells Notices to crypto firms.
These reactions are coming out following Robinhood’s admission of receiving such a notice for its cryptocurrency section. Jake Chervinsky, Chief Legal Officer of Variant Fund, has posted on X that the SEC just sent a Wells notice to Robinhood.
He continued, “The number they’ve sent about crypto in recent months is astonishing. It’s hard to imagine that they would (or could) bring so many enforcement actions at once. It seems like they’re abusing the Wells process as a scare tactic now.”
Rodrigo Silva-Herzog, former Paradigm special counsel and current special counsel at Cooley LLP echoed sentiments on the SEC’s approach. He questioned on X., “SEC continues its carpet bombing campaign against crypto, issuing another Wells to Robinhood. You have to wonder whether at this point Gensler has bit off more than he can chew.”
Chervinsky argued that the SEC’s concentration on crypto, rather than equity and debt markets, is disproportionate. He warned that if the SEC pursues as many enforcement actions as the Wells notices sent, it would violate its legal obligations.
Alternatively, he suggested the SEC might be misusing the Wells process for undue scrutiny and intimidation of legitimate US companies.
According to a Form 8-K filing earlier on Monday, Robinhood disclosed that the SEC planned to bring an enforcement action against its cryptocurrency division, accusing it of securities violations.
Also Read: Consensys Filed Lawsuit Against SEC Over Ethereum Regulation
Robinhood’s Chief Legal, Compliance, and Corporate Affairs Officer, Dan Gallagher, expressed doubts about the lawsuit’s efficacy. He emphasized their belief that the assets on their platform are not securities, expressing readiness to engage with the SEC to demonstrate the weakness of any potential case against Robinhood Crypto, both factually and legally.
The SEC sent Uniswap a Wells Notice last month. The SEC also sent a Wells Notice to Consensys, the Ethereum development studio, in April.
