The Digital Chamber criticizes SEC over Wells notice to Robinhood Crypto

The
Digital
Chamber,
a
digital
asset
sector
trade
association,
has
slammed
the
SEC
for
issuing
a
Wells
notice
to

Robinhood
Crypto.

On
May
6,
the
group

issued
a
statement in
which
it
expressed “profound
disappointment
and
concern”
about
the
latest
notice.
The
association
also
described
it
as
an
example
of
regulatory
overreach.

The
Digital
Chamber
underscored
its
continued
resistance
to
the
SEC,
which
it
claims
is
expanding
its
scope
without
congressional
authorization.
It
said
that
Congress
is
“actively
deliberating
legislation”
to
clarify
regulatory
jurisdiction
over
cryptocurrency
and
accused
the
SEC
of
violating
the
process.

To
resolve
jurisdictional
issues,
the
Digital
Chamber
called
for
“immediate
legislative
action”
and
insisted
that
SEC
Chairman
Gary
Gensler
testify
before
Congress.

The
Digital
Chamber
backed
Robinhood,
pointing
out
the
company’s
self-proclaimed
good-faith
compliance
efforts
and
attempts
to
register
with
the
SEC.

The
association
stated:

“The
Digital
Chamber
stands
ready
to
support
Robinhood
Crypto
and
other
affected
companies
in
seeking
a
resolution
that
protects
their
ability
to
operate
and
innovate,
as
well
as
defending
the
rights
of
digital
asset
users
and
entrepreneurs
nationwide.”

While
it
did
not
state
its
intention
to
file
an
amicus
brief
in
support
of
Robinhood,
it
did
note
that
it
had
done
so
previously,
citing
its
February
filing
in
favor
of
crypto
exchange
Kraken.

The
Digital
Chamber
also
claimed
that
the
SEC’s
actions
are
inconsistent
with
the
regulator’s
investor
protection
duty,
saying
that
aggressive
enforcement
affects
emerging
companies
and
reduces
investors’
capacity
to
make
autonomous
financial
decisions.

On
May
4,
Robinhood
revealed
that
its
subsidiary,
Robinhood
Crypto,
had
received
a

Wells
letter
from
the
SEC.
It
further
elaborated
on
the
development
in
a
post
on
May
6.

A
Wells
notice
allows
companies
to
counter
the
SEC’s
allegations
before
the
agency
proceeds
with
enforcement
actions.
However,
the
notice
does
not
guarantee
that formal
action
will
be
taken.

The
latest
legal
trouble
for
Robinhood
Crypto
comes
as
it

faces
greater
regulatory
attention
from
US
authorities who
have
aimed
their
crosshairs
on the
rapidly
evolving
crypto
market.

Some
crypto
lawyers
have
referred
to
the
ongoing
issuance
of
Wells
Notices
to
companies
like
Robinhood,

Uniswap,
and
Consensys
as
a
“carpet
bombing
campaign”
against
the
crypto
sector.
They
contend
that
this
approach
may
overstretch
the
SEC’s
powers
and
cause
substantial
operational
and
legal
problems
for
the
affected
companies.