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Feb. 24 (UPI) -- Robinhood on Monday said the U.S. Securities and Exchange Commission ended its investigation into Robinhood Crypto, saying it will not pursue further action with company officials adding it "never should have been opened."
The SEC's Enforcement Division on Friday notified Robinhood in a letter that it had concluded its investigation and "did not intend to move forward with an enforcement action," according to a release by company officials.
"We applaud the staff's decision to close this investigation with no action," Dan Gallagher, chief legal counsel and compliance and corporate affairs officer for Robinhood Markets, Inc., said Monday.
Robinhood shares initially went up following the news but were lower by roughly 5% as the market witnessed a pullback.
The company received a notice in May of last year warning that Robinhood could be legally charged for a potential violation of securities law in its crypto platform after Robinhood got subpoenaed for cryptocurrency listings, custodial and operation issues despite "years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to 'come in and register,'" Gallagher said at the time.
Robinhood maintains that it has long disagreed with the legal argument that transactions in most digital assets should be subject to federal securities law.
Gallagher suggested the investigation "never should have been opened" and that Robinhood "always has and will always respect federal securities laws and never allowed transactions in securities," he added.
Robinhood said it "made difficult choices not to provide certain products and services that the SEC under previous Chair Gensler alleged are securities in public actions." "
"We're helping advance a more transparent and tailored regulatory environment for digital assets," the company said, adding it looks forward to working with the SEC under the Trump administration in order to "establish a clear path forward."
In December 2020, the SEC fined Robinhood $65 million for allegedly misleading its customers about how it makes money. However, while Robinhood did agree to pay the fine, a company attorney said at the time its penalized activities "do not reflect Robinhood today."
On Monday, Robinhood officials suggested that it's time for the SEC to turn to "regulation by regulation" versus a perceived "regulation by enforcement" to provide market participants "with clarity" and an "appropriate regulatory framework for digital assets."
"As we explained to the SEC, any case against Robinhood Crypto would have failed," Gallagher wrote Monday. "We appreciate the formal closing of this investigation, and we are happy to see a return to the rule of law and commitment to fairness at the SEC."
On Friday the SEC also agreed in principle to drop a 2023 federal lawsuit that charged Coinbase with illegally selling securities by failing to properly register a crypto staking program.
