Robinhood is on a collision course with the SEC, setting the stage for a potential legal battle. Under Chair Gary Gensler, the SEC is eyeing Robinhood’s growing cryptocurrency business, exploring whether the platform is operating as an unregistered broker-dealer and clearing agency.
According to a recent report, if charges are filed, it could complicate the career of Dan Gallagher, Robinhood’s Chief Legal Officer, who is being touted as a contender for SEC chair if Donald Trump returns to the White House.
Former commissioner of the SEC Gallagher has clearly emerged as an insider favorite. But the timing is awkward. Gallagher may have to fend off a lawsuit from the agency he could be leading.
Gallagher said that compared to the competition, Robinhood has been conservative, for example, offering fewer crypto tokens and staying away from more sensitive practices like crypto lending.
Despite the looming threat, Gallagher sounded very confident, terming a case against Robinhood as weak. He pointed to the conservativeness of the company when it comes to crypto listings, saying this should go all the way when the lawsuit hits the court. “We’ve deliberately avoided a more aggressive approach, which puts us in a unique position,” Gallagher stated.
SEC’s aggressive oversight of crypto
But the SEC has taken a very aggressive stance in the crypto space, and Gensler’s increased focus on regulation of the $2 trillion market might make Robinhood an easy target.
Whether this legal drama plays out is almost beside the point. It will surely highlight Gallagher in what has otherwise been a quiet pre-decision period. During this time, his name is floated in contexts describing potential future SEC leaders.
With Election Day fast approaching, Gallagher’s position on Robinhood and his crypto regulation stance will likely raise eyebrows. This is especially true as he emerges as the front-runner for a critical financial regulation role.
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