The US Securities and Exchange Commission (SEC) has issued a Wells notice to crypto platform Robinhood.
As a result of the news, Robinhood's share price fell 2.5% before the market opened, hitting $17.95 at 12:50 p.m. UTC May 4, according to a court filing.
A Wells notice is a letter from the securities regulator that signals the conclusion of its investigation into a specific entity, in this case, Robinhood's US-based crypto business.
Access more than 50 of the world's financial markets directly from your EXANTE account – including NASDAQ, London Stock Exchange and Tokyo Stock Exchange
The SEC has been exploring Robinhood's crypto listings and custody operations and has reached a "preliminary determination" to recommend the filing of an enforcement action for alleged securities violations.
This development has come despite Robinhood's efforts to register with the US securities watchdog, according to Dan Gallagher, Robinhood Markets' head of legal, compliance and corporate affairs.