SEC Drops Robinhood Crypto Probe, Firm Criticizes Investigation

Regulatory Scrutiny Ends Without Enforcement Action

Robinhood Crypto has emerged unscathed from a months-long investigation by the U.S. Securities and Exchange Commission, which officially concluded its probe “with no action,” the trading platform said in a statement. The SEC’s Enforcement Division had previously issued a Wells Notice to Robinhood in May 2024, signaling a potential enforcement action, but the regulator ultimately opted not to move forward. An SEC spokesperson declined to comment on the decision.

Dan Gallagher, Robinhood’s head of legal and compliance, did not mince words in his response, stating the probe “should never have been opened” in the first place. Gallagher insisted the company “never allowed transactions in securities” and argued that the SEC should move away from its aggressive enforcement approach. “Instead of regulation by enforcement, it’s time for the SEC to turn to regulation by regulation—providing market participants with clarity and an appropriate regulatory framework for digital assets,” the firm said.

The dropped investigation comes amid a shift in the SEC’s stance on cryptocurrency oversight, coinciding with the inauguration of U.S. President Donald Trump. Since taking office, the administration has taken steps toward a more industry-friendly approach, appointing a crypto-focused task force under Commissioner Hester Peirce and rolling back restrictive policies, including the controversial Staff Accounting Bulletin (SAB) No. 121. The SEC’s decision to walk back the Robinhood probe mirrors similar moves in recent days, including ending its investigation into NFT marketplace OpenSea and dropping pending charges against Coinbase.

Gallagher, who was once considered a possible replacement for SEC Chair Gary Gensler, reaffirmed that he had no interest in leading the agency. “It is always an honor to have your name in the mix for an incredibly important job like SEC Chairman,” he said. “However, I have made it clear that I do not wish to be considered for this position.”

Robinhood’s stock saw a modest premarket boost following the news, rising 2.4% after closing down 7.9% on Friday. Crypto has played a growing role in the company’s business, contributing nearly half of its $672 million transaction-based revenue in the fourth quarter. That figure marked a 700% surge as Bitcoin soared past $100,000, a rally largely attributed to optimism surrounding Trump’s re-election and expectations of looser crypto regulations.

This article has been refined and enhanced by ChatGPT.