SEC ??targets Robinhood, Grayscale’s Ethereum ETFs, & More
Another Wells notice has hit the crypto industry as the United States Securities and Exchange Commission (SEC) intensifies its scrutiny, targeting Robinhood.
The popular trading platform received the notice on May 4, signaling potential enforcement action over alleged securities violations related to cryptocurrency listings and custodian operations.
Like other crypto firms that have received similar notices from the agency — including Coinbase, Kraken, and Uniswap — Robinhood has promised to fight any SEC action while complaining about the lack of federal guidance.
Meanwhile, Grayscale withdrew its application for an Ether (ETH) futures exchange-traded fund (ETF) just three weeks before the SEC is set to make a decision, and crypto exchange Coincheck is on its way to becoming a Nasdaq-listed company.
Along with Robinhood’s Wells notice and Grayscale’s Ether ETF applications, this week’s Crypto Biz features Coincheck’s merger deal and Block’s billionaire debt offering.
Robinhood crypto business slapped with SEC Wells notice
The U.S. SEC issued a Wells notice to Robinhood on May 4, signaling potential enforcement action over alleged securities violations. According to a regulatory filing, the SEC has been investigating the platform’s cryptocurrency listings and custodian operations despite Robinhood’s attempts to comply with regulations — including avoiding the listing of certain tokens or providing crypto lending and staking services. Robinhood criticized a lack of regulatory clarity at the federal level, claiming that this complicates compliance and hinders broader crypto adoption.
Grayscale withdraws its Ethereum futures ETF application
Grayscale has withdrawn its 19b-4 application for an Ether futures ETF just three weeks before the SEC was scheduled to decide on it. The cryptocurrency asset manager filed a notice of withdrawal for the Grayscale Ethereum Futures Trust with the SEC on May 7. The Ether futures ETF was initially filed on Sept. 19, 2023, and if it were approved, it would have been listed on the New York Stock Exchange. Bloomberg analyst James Seyffart previously suggested that Grayscale intended to use the ETF as a “trojan horse” to pressure the SEC into approving its spot Ether ETF.
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Coincheck, Thunder Bridge move closer to Nasdaq listing with public filing
Japanese crypto exchange Coincheck and Thunder Bridge Capital have moved closer to completing their merger and Nasdaq listing. According to a May 7 press release, the companies filed a Form F-4 registration statement with the U.S. SEC, marking a milestone in their two-year journey toward a public offering. Initially disclosed in March 2022, the proposed business combination aims to make Coincheck a publicly traded entity through a de-SPAC transaction with Thunder Bridge. Originally valued at $1.25 billion, the merger completion was delayed by the severe bear market and regulatory uncertainties following the collapse of FTX. The transaction is now expected to be completed in the second or third quarter of 2024.
Jack Dorsey’s Block to raise $1.5 billion in senior notes offering
Jack Dorsey’s fintech firm Block has announced a plan to raise at least $1.5 billion through a private offering of senior notes. The company aims to utilize the funds for general corporate purposes, such as capital expenditures and repayment of existing debt. The notes will be offered in two series, with maturities of 2027 and 2033. Investors permitted to join the round include pension funds, banks, mutual funds, and high-net-worth individuals. The terms of the notes, including interest rates and maturity dates, are subject to negotiation with the initial purchasers, according to Block.
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The SEC is little more than a political weapon against crypto at this juncture. If I were an American, I would feel ashamed of its blatant partiality and pig-headedness. So much for protecting investors and facilitating capital formation -- regulatory capture springs to mind. Hopefully, Hester Peirce can bring it back from the brink once Gensler goes back to Goldman Sachs.