12:53 PM EDT, 05/06/2024 (MT Newswires) -- Robinhood Markets' ( HOOD ) cryptocurrency business has received a notice from the Securities and Exchange Commission about a likely enforcement action against the digital currency trading platform, the company disclosed on Monday.

Robinhood Crypto received a so-called Wells Notice from the SEC on Saturday, indicating SEC staff's "preliminary determination" to recommend an enforcement action for certain alleged violations, retail trading platform Robinhood Markets ( HOOD ) said in a filing.

The company previously disclosed that it received multiple subpoenas from the regulator regarding the unit's crypto listings and custody, as well as platform operations, among other topics, Robinhood said Monday. It has been cooperating with the investigation.

"After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to 'come in and register,' we are disappointed that the agency has decided to issue a Wells Notice related to our US crypto business," said Dan Gallagher, Robinhood Markets' ( HOOD ) chief legal, compliance and corporate affairs officer.

A determination from the SEC that any cryptocurrencies supported by Robinhood's platform are securities could impact the company's ability to facilitate trading of those assets and lead to penalties, Robinhood said last February.

"We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law," Gallagher said.

A potential enforcement action could involve a civil injunctive action, public administrative proceeding, and/or a cease-and-desist proceeding, Robinhood Markets ( HOOD ) said. "Robinhood Crypto has made difficult choices not to list certain tokens or provide products, such as lending and staking, that the SEC previously alleged are securities in public actions against other platforms," according to Robinhood.

The SEC "does not comment on the existence or nonexistence of a possible investigation," a spokesperson told MT Newswires via email.

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