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.