Robinhood Ceases Support for 3 Tokens Involved in SEC Lawsuits

Cryptocurrency App Robinhood to Cease Support for Tokens Involved in SEC Lawsuits

Cryptocurrency and stock trading app Robinhood has recently announced its decision to terminate support for three tokens, namely Cardano, Polygon, and Solana. These tokens have been classified as unregistered securities by the United States Securities and Exchange Commission (SEC) in its recent legal actions targeting major crypto exchanges Binance and Coinbase.

Delisting Date and Rationale

In an update shared on June 9, Robinhood revealed that it will discontinue support for the three aforementioned tokens starting from June 27. The decision to delist them followed a thorough review conducted by the company. Via a Twitter thread, Robinhood explicitly cited the SEC’s actions as the primary reason for the delisting, emphasizing that the lawsuits against Coinbase and Binance had cast a shadow of uncertainty over these particular tokens, which were the only ones supported by Robinhood involved in the cases.

“We firmly believe in the future of cryptocurrency and will continue to advocate for regulatory clarity within the United States. Our objective is to enable customers to participate in the marketplace with enhanced confidence,” stated Robinhood.

SEC Lawsuits and Impact

On June 5, the SEC filed a lawsuit against Binance, accusing the exchange of offering unregistered securities. Subsequently, the regulator pursued similar allegations against Coinbase, a prominent U.S.-based crypto exchange. The lawsuit identified 13 tokens, including Cardano (ADA), Polygon (MATIC), and Solana (SOL), as unregistered securities.

Dan Gallagher, the former SEC commissioner and currently the Chief Legal Compliance and Corporate Affairs Officer at Robinhood, testified in a congressional hearing held on June 6. Gallagher expressed his view that complying with the current regulatory framework as a registered broker-dealer in the U.S. was akin to “doing crypto the hard way.” He further commented on the challenging nature of the SEC’s guidelines for crypto firms, even when Robinhood had diligently attempted to follow them.

Gallagher explained, “When Chair [Gary] Gensler of the SEC said in 2021, ‘Come in and register,’ we did. We embarked on a 16-month journey with the SEC staff to register a special purpose broker-dealer. However, in March, we were informed that the process was terminated and that our efforts would bear no fruits.”

Reactions and Inconsistencies

The SEC lawsuits have sparked outrage among numerous cryptocurrency users, who have pointed out inconsistencies in the regulator’s approach to handling digital asset firms. For instance, the lawsuit against Coinbase alleges that the exchange has been operating as an unregistered security broker since 2019, despite going public in April 2021.

Binance.US and its CEO, Changpeng Zhao, were also named in the SEC’s cases against crypto exchanges. They were accused of playing roles in the unregistered offers and sales of tokens, including BNB (Binance Coin). Responding to the SEC’s “extremely aggressive and intimidating tactics,” Binance.US announced on June 8 that it would suspend U.S. dollar deposits.