The Digital Chamber, a trade association for the digital assets industry, criticized the SEC for issuing a Wells Notice to Robinhood Crypto.
On May 6, the group Issued A statement expressing “deep disappointment and concern” about the latest notice. The association also described it as an example of regulatory overreach.
The Digital Chamber has emphasized its continued resistance to the SEC, which it claims is expanding its reach without authorization from Congress. She said Congress is “actively discussing legislation” to clarify regulatory jurisdiction over cryptocurrencies and accused the SEC of violating the process.
To resolve the lawsuits, the Digital Chamber called for “immediate legislative action” and insisted that SEC Chairman Gary Gensler testify before Congress.
The Digital Chamber backed Robinhood, citing good-faith compliance efforts announced by the company and its attempts to register with the Securities and Exchange Commission.
The association stated:
“The Digital Chamber stands ready to support Robinhood Crypto and other affected companies in seeking a solution that protects their ability to operate and innovate, as well as defend the rights of digital asset users and entrepreneurs nationwide.”
Although she did not mention her intention to file an amicus brief in support of Robinhood, she noted that she had done so previously, citing its February filing for cryptocurrency exchange Kraken.
The Digital Chamber also claimed that the SEC's actions conflict with the regulator's investor protection duty, saying strict enforcement impacts startups and reduces investors' ability to make independent financial decisions.
On May 4, Robinhood revealed that its subsidiary, Robinhood Crypto, had received a Wells letter from the SEC. It explained more details about the development in a post dated May 6.
The Wells Notice allows companies to confront SEC allegations before the agency initiates enforcement actions. However, notice does not guarantee formal action.
Robinhood Crypto's latest legal trouble comes as it faces greater regulatory attention from US authorities who have targeted the rapidly developing cryptocurrency market.
Some cryptocurrency lawyers have pointed to the ongoing issuance of Wells Notices to companies like Robinhood, Uniswap, and Consensys as an “all-out bombing campaign” against the cryptocurrency sector. They contend that this approach could exceed the SEC's powers and cause significant operational and legal problems for affected companies.