The SEC sent a “Wells Notice” to Robinhood over the weekend, according to the company’s official statement on Monday. This notice is a formal notice that SEC staff uses to recommend taking enforcement action against a company as a result of an investigation. Dan Gallagher, Robinhood’s head of legal, compliance and corporate affairs, expressed his frustrations in a blog post on the issue. “After years of working in good faith with the SEC to provide regulatory clarity, we are disappointed to receive this notice,” Gallagher said.

Gallagher stated that they believe that the crypto assets listed on Robinhood’s platform are not securities and that they are ready to discuss this issue with the SEC. “We look forward to explaining to the SEC how weak any case will be, both on the facts and the law,” he said.

Although Robinhood’s shares first lost 2% in value after this news, they later recovered and were last traded up 1%. This may suggest to investors that the company may not be negatively affected by this fight with the SEC.

However, the real source of tension dates back to February. Robinhood said at the time that it had received subpoenas from the SEC regarding its cryptocurrency-related business, specifically cryptocurrency listings, custody and platform operations. The statement made on Monday reveals that the SEC has drawn a conclusion from this investigation and found a reason to believe that Robinhood violated the Securities Exchange Act.

According to the filing, SEC staff believes Robinhood Crypto violated Sections 15(a) and 17A of the Securities Exchange Act of 1934. If this happens, Robinhood could face serious sanctions. These sanctions may include injunctive relief, public administrative action, and cease and desist action. In addition, sanctions such as injunction, cease and desist order, repayment of ill-gotten gains, pre-appeal interest, punitive fines and even activity restrictions may also be possible.

Robinhood plans to release its quarterly earnings report on Wednesday amid this crisis. Investors will follow this report closely to learn how the company is affected by this cryptocurrency-related investigation and its future plans.

These developments reignite regulatory debates in the cryptocurrency market. The fact that even big players like Robinhood have run-ins with the SEC shows that the legal status of cryptocurrencies is still unclear. While the SEC appears to view cryptocurrencies as securities, Robinhood argues that these assets are not securities. This situation leaves both cryptocurrency investors and cryptocurrency companies in uncertainty.

It will be followed with curiosity how this fight between the SEC and Robinhood will end in the coming period. The outcome of this case may also affect future regulation of the cryptocurrency market.