Robinhood, a cryptocurrency exchange, has caught the attention of the Securities and Exchange Commission after it was subpoenaed about its crypto-based operations. As a result, Robinhood might be the next on the Sec’s radar after Ripple.
Since the collapse of FTX, Alameda Research, its sister company, and the filing for bankruptcy in November of the previous year, securities regulators have tightened the knot on crackdown crypto service providers.
The DOJ attacks on crypto exchanges are coming from all directions. But, first, it launched its attacks on Sam Bankman fried and Alameda Research as its first victim, the former co-founder and chief executive officer of the collapsed FTX.
The two were indicted for the allegation of multiple fraud and allegations cases. Currently, Mr. Bankman is facing a risk of being convicted for more than a hundred years if found guilty.
These vigorous attacks from the securities and attacks are an attempt to set an example to other participants in the crypto industry operated on blockchain technology. The second attack was by the Securities and Exchange Commission, which relentlessly tries to bring down the crypto industries.
The previous week, the federal authority stated to all crypto exchange providers that all virtual and digital assets are securities except Bitcoin, the largest crypto asset by market capitalization.
Tokens to be Treated as Securities
Considering all virtual and digital assets as securities will render these tokens useless. Worse, industries and companies offering this kind of crypto services might directly violate the rule of law.
According to the Securities and Exchange Commission, security is the capitalization of funds, in a popular industry, with sensible anticipation of benefits that are achieved through the efforts of others.
From a couple of years ago until recently, tokens have never been treated as securities. This situation implies that they are decentralized and are not regulated or governed by any government in the world, making them immune from the rule of financial honesty compared to securities and other centralized tokens.
In addition, their listing procedures are less vigilant than others securities. The SEC has launched its vigorous attacks and spotted out Robinhood, a crypto brokerage service provider, as the exchange announced as the week commenced that the SEC had subpoenaed it over its crypto operations.
Robinhood Might End Operations
The crypto brokerage service provider, Robinhood, issued a statement urging that if the federal courts and the Securities and Exchange Commission declared that tokens are securities, they would be left with no choice but to end operations of these assets on their platform.
Robinhood reported that it might affect the firm negatively because some financial losses will be incurred in penalties. In such an event, we will be liable to our consumers, and the company will be mandated to reimburse each one.
The crypto brokerage added that the company might also be exposed to administrative and governmental restrictions over the failure to operate according to the streamlined rules by the securities regulators or operating as a financial institution without proper application from the SEC.
Apart from the crypto brokerage service provider, the SEC is also on the neck of several crypto exchanges, such as Coinbase and Paxos, among other exchanges offering crypto-based services or products that the authorities view as securities.