If you hold crypto with a broker, news of a regulator investigating that broker can make your own coins feel at risk. A warning letter, a closed case and a state fine each mean something different, and the risk that reaches your account is a coin being removed from trading, which you can prepare for.
Robinhood Crypto, the company's crypto trading business, has faced all three. SEC staff sent it a Wells Notice on May 4, 2024, alleging violations of Sections 15(a) and 17A of the Securities Exchange Act of 1934 (source: SEC, May 4, 2024 8-K). SEC Enforcement closed that investigation in writing on February 21, 2025. Robinhood still counts among its risks the chance that the SEC or a court finds a supported coin to be a security, which could end trading in that coin (source: Robinhood Markets, 2025 10-Q).
What is the May 2024 Wells Notice?
The May 2024 Wells Notice is the notice Robinhood Crypto received from SEC staff on May 4, 2024, saying staff had made a preliminary determination to recommend an enforcement action for alleged violations of Sections 15(a) and 17A of the Exchange Act. Robinhood disclosed it in a Form 8-K filed May 6, 2024 (source: SEC, May 4, 2024 8-K).
The notice set out the kinds of case staff might bring, which ranged from a civil lawsuit asking a court for an injunction to a public administrative proceeding or a cease-and-desist proceeding. The possible remedies covered orders to stop the conduct, giving back profits with interest, money penalties, a public censure, and restrictions on the business up to revocation. The notice also came at the end of a longer inquiry, because Robinhood Crypto had already received investigative subpoenas about which coins it listed, how it held customer coins and how the platform operated. Robinhood Crypto had cooperated with that inquiry (source: SEC, May 4, 2024 8-K).
For a holder, the notice was an early warning. It recommended that a case be filed, so any court order or penalty would have come only after a lawsuit or a proceeding had run its course. A coin coming off the platform would have been a separate decision, announced to customers with its own deadline. Selling every coin the day a Wells Notice appears treats a recommendation as a ruling, and it locks in whatever price the market offers in the middle of the headlines.
What the notice did tell holders was where the agency's attention sat. Listings, custody and platform operations were the subjects of the subpoenas, and the first of those, which coins a platform offers, is the one that reaches a customer's account most directly. The rest of the story turns on how that inquiry ended and on the separate question of whether any particular coin is a security.
How the SEC investigation closed in February 2025
On February 21, 2025, SEC Enforcement told Robinhood Crypto in writing that its investigation was over and that it would not recommend an enforcement action. That letter closed the inquiry behind the May 2024 Wells Notice nine and a half months later, so no SEC case followed (source: Robinhood Markets, 2025 10-Q).
A closed investigation ends one case. It leaves room for new questions: Robinhood has said it may receive further SEC inquiries about specific cryptocurrencies it supports, as it has in the past (source: Robinhood Markets, 2024 10-Q). The February 2025 letter answered whether staff would pursue the case it had warned about in May 2024, and that answer was no.
The close also left Robinhood's own listing process where it was. Listing committees at Robinhood Crypto and at its European crypto business review the coins on offer on a regular basis. Those committees can remove any coin from the platform for a range of reasons (source: Robinhood Markets, 2025 10-Q). That review runs whether or not a regulator is asking questions, so a coin can come off the platform after an internal decision as well as after a legal one.
For a holder, the practical reading is that the 2025 close removed one specific threat, a federal case over how the platform operated, while the coin-by-coin risk stayed in place. Any coin you hold can still be reviewed, and it can still lose support if a regulator or a court reaches a finding about it. Keeping the two dates apart helps: May 4, 2024 is the warning, and February 21, 2025 is the written end of that warning.
The $30 million New York penalty in August 2022
On August 2, 2022, New York's Department of Financial Services announced that Robinhood Crypto would pay a $30 million penalty for significant failures in its anti-money-laundering and cybersecurity programs. The department found that those failures broke four of its rules, covering virtual currency, money transmission, transaction monitoring and cybersecurity (source: NYDFS, August 2, 2022).
The findings came out of a supervisory examination followed by an enforcement investigation. The department found the anti-money-laundering program short of staff and slow to move away from a manual transaction-monitoring system that was too limited for the firm's size, its customer profiles and its trading volumes. It also found critical failures in the cybersecurity program, which left some of the firm's operational risks unaddressed (source: NYDFS, August 2, 2022). The consent order that set the terms is dated August 1, 2022, one day before the announcement (source: NYDFS, Consent order).
The penalty is a state matter about compliance, and it is separate from the federal Wells Notice two years later. Anti-money-laundering rules govern how a firm watches for suspicious activity, and cybersecurity rules govern how it protects its systems. Neither finding was about whether a particular coin is a security, so the token-status question belongs to the federal side. The firm paid the penalty to the state, so the money came from the business and went to New York.
The cybersecurity findings still matter to a customer. They show that a firm's own defenses can fall short of what its supervisor expects, which makes the security of your own login and the place you keep coins you are not trading worth your attention. How Robinhood stores customer crypto, and what that storage protects against, is explained in Is Robinhood Crypto safe, and the steps you can take yourself are set out further down.
Token status and the risk of a delisting
Token status is the legal question of whether a particular coin counts as a security under US law. In the fourth quarter of 2023, SEC staff was considering whether certain coins already supported on the Robinhood Crypto platform might be securities (source: Robinhood Markets, 2024 10-Q). That question sits behind every delisting risk a Robinhood Crypto customer faces.
If the SEC or a court decides that a coin Robinhood supports is a security, Robinhood might stop facilitating trading in that coin in the United States, including ending support for it on the platform. The same decision might also lead Robinhood to remove other coins because they resemble the one found to be a security (source: Robinhood Markets, 2025 10-Q). So a ruling about one coin can affect a different coin you hold.
The question is hard to call in advance. Robinhood describes the test for whether a coin is a security as a complex, fact-driven analysis whose outcome is difficult to predict and can change as the coin and its network change. The SEC has historically given no advance confirmation of any particular coin's status, and Robinhood's own assessments are risk-based judgments, short of a legal determination (source: Robinhood Markets, 2024 10-Q).
That is why the February 2025 close left the delisting risk in place. The closed investigation was about the platform. Token status is about each coin, and it can be settled by a lawsuit against a different company, a court ruling or a change in how a coin works. The record of coins Robinhood has removed, with their dates, is in Robinhood crypto delistings. For a holder, the coin you own is the unit of risk, and the platform's legal history is background to it. The same question applies before you buy crypto on Robinhood: could you sell or move that coin by a deadline if support ended?
What these regulatory actions mean for Robinhood Crypto customers
For a Robinhood Crypto customer, these actions come down to three facts. A coin you hold can lose support, with a deadline to sell or move it. Trading in a coin can stop after a legal finding about it. And crypto in the account has no SIPC protection (source: Robinhood, How you're protected).
The clearest example came in June 2023. After SEC lawsuits against two other crypto platforms alleged that Cardano (ADA), Polygon (MATIC) and Solana (SOL) were unregistered securities, Robinhood ended support for all three at 6:59 PM Eastern Time on June 27, 2023. Customers could sell the coins or withdraw them until that deadline. Coins still in an account afterward were sold at market prices on the customer's behalf (source: Decrypt, June 9, 2023). A sale at the cutoff takes whatever price the market offers at that moment, so a holder who waited gave up the choice of when to sell.
Protection on the account is narrower than many customers assume. Robinhood is not an FDIC-insured bank. Only uninvested cash in its cash sweep program can become eligible for FDIC insurance (source: Robinhood, How you're protected). SIPC covers cash and securities at member brokerages. Any digital asset that falls outside the legal definition of a security is excluded (source: SIPC, What SIPC Protects). What Robinhood does have in place is operational. Most customer coins sit in cold, offline storage, with some in online hot wallets for daily operations. Robinhood also carries crime insurance that covers a portion of the assets in its storage systems against theft, cybersecurity breaches included (source: Robinhood, Crypto security).
That insurance is a backstop against theft from the firm. A fall in a coin's price, a delisting or a forced sale at a cutoff are outside what it covers, and those are the outcomes regulatory action is most likely to produce. The New York findings add one more point, which is that the firm's own security programs have fallen short before, so the security of your login is a part of the risk you control.
How to protect yourself from future regulatory changes
A regulator's or a court's decision is out of your hands, but how fast you can act when one lands is yours to set. The steps below are practical habits for any Robinhood Crypto account. They keep you informed, keep your routes out of the platform open and keep your records ready. None of them predicts anything about a coin.
- Read every notice about a coin you hold. Robinhood messaged customers ahead of the June 2023 deadline for ADA, MATIC and SOL (source: Decrypt, June 9, 2023). Put any new date and time in your calendar, and decide well before it whether to sell the coin or move it.
- Turn on crypto transfers before you need them. Robinhood verifies your identity before it enables transfers, which is usually quick but can take up to 5 business days. With address allowlisting turned on, each new address waits 48 hours before it takes effect. Add your wallet address early.
- Learn the send steps. Open the coin's detail page, select Send, paste the receiving wallet's address, enter the amount, then select Review and Submit. A transfer is final once sent. One wrong character in the address can lose the funds (source: Robinhood, Crypto Transfers). Check the address before you submit.
- Set up a wallet you control. A self-custody wallet such as Robinhood Wallet gives you sole control of your coins on supported networks, with your own private keys. Losing those keys means losing access to the balance (source: Robinhood Markets, 2024 10-Q).
- Secure your login. Use a password you use for no other service, at least 10 characters long, mixing capital and small letters with numbers and symbols. Never share it with anyone (source: Robinhood, Security best practices).
- Keep your own records. Robinhood sends Form 1099-DA when you sold crypto in the tax year. Coins transferred in from another provider arrive without their cost basis (source: Robinhood, Crypto tax FAQ). Keep your own purchase records for those coins. A custom account activity report, downloadable as a CSV file, gives you a copy of your transactions (source: Robinhood, How to read your 1099-DA).
- Size what you keep on one platform. Hold no more on any single platform than you could afford to have frozen, or sold at a cutoff price you did not choose.
Each step shortens the time between a notice and your response. With transfers enabled, a wallet address approved and your purchase costs on file, you can act as soon as a deadline is announced, while starting the identity check that week can leave you short of time. The full send process is in how to withdraw crypto from Robinhood.
Records matter because a sale at a delisting cutoff is still a sale, and its gain or loss belongs on your tax return. How the forms work is covered in Robinhood crypto tax reporting. Robinhood does not give tax advice (source: Robinhood, Crypto tax FAQ). A specific return belongs with a tax professional, and none of these steps is investment advice.
How do you trade bitcoin on BloFin?
If you plan to spread your crypto across more than one platform, another way to trade bitcoin is BTC/USDT Spot or the BTCUSDT Perpetual on BloFin. Spot means you own the coin, while the perpetual is a margined futures contract with no expiry.
The spot market shows a bid and an ask in its order book. A market buy fills against the ask and pays the taker fee, while a limit order that rests on the book and fills later pays the maker fee. Check which of the two your order type will pay before you confirm, because the fee is part of the cost of the trade. A filled spot order leaves bitcoin in your account, and you can hold it through a sharp move without being forced out of the position.
The perpetual works differently. You post margin, which is a deposit against the position, and the contract's value follows the bitcoin price. If the price moves far enough against you, the position can be liquidated, which means it is closed automatically and the margin behind it is lost. That makes the size of a perpetual position a question of how much margin you can afford to lose, as well as how much bitcoin exposure you want.
The choice between the two follows from what you want to do. If you want to own bitcoin and keep it, spot is the direct route. If you want price exposure you can open and close without holding the coin, the perpetual fits, with liquidation as the risk you accept for it. Either way, the fee you pay depends on whether your order takes liquidity from the book or adds to it. The trade-offs between the two products are set out side by side in BloFin spot versus futures trading, and the wider platform comparison is Robinhood Crypto versus BloFin.
Maker and taker rates for both markets are on the BloFin fee schedule, so you can compare the cost of a trade before you place it.
Sizing a bitcoin order on BloFin
Size a bitcoin order from the loss you can accept, then the exit price, then the order. Say the most you would accept losing on a spot purchase is $100, and you plan to sell if the price falls 5% below your entry. Dividing $100 by 0.05 gives a $2,000 position, plus the trading fee.
Start with that loss figure before you look at the price, because the position size follows from it. Then write down the exit, the price at which you sell if the trade goes against you, and only then place the order. If the fill comes in at a different price from the one you planned, check the size against your loss figure before you add anything, since a worse entry moves the stop closer and the loss per bitcoin grows.
The same arithmetic changes on the perpetual. A $2,000 perpetual position opened with $400 of margin is 5x exposure, so a 5% move against you costs $100, which is 25% of the margin. A 20% move against the same position would cost the full $400 of margin, so the stop has to sit well inside that distance. Smaller margin for the same position size raises that risk quickly, which is the core of BloFin futures risk management.
A common mistake is sizing from the balance in the account. If you have $10,000 and buy $10,000 of bitcoin, the market sets your loss limit, and a 5% fall costs $500, five times the $100 in the example above. Sizing from the loss you can accept keeps each order inside a limit you chose, and it leaves cash in the account for the next decision.
Looking to trade BTC on BloFin? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, and navigate to the BTC/USDT Spot trading page or the BTCUSDT Perpetual page.
Frequently asked questions
Which letter closed the broker-dealer funds inquiry?
On January 13, 2025, the SEC told Robinhood in writing that it had closed its investigation into whether the broker-dealers complied with the Electronic Funds Transfer Act, the federal law on electronic money transfers. That matter concerned the broker-dealers and how they handled cash transfers. It is a separate case from the crypto investigation, which closed on a different date and under different statutes, so an early-2025 close should always be matched to the right business (source: Robinhood Markets, 2025 10-Q).
What did New York require besides the penalty payment?
The August 2022 settlement required Robinhood Crypto to retain an independent consultant for eighteen months. The consultant evaluates how the firm complies with the department's rules and how well it fixes the deficiencies the examination found. The payment and the consultant are two obligations from the same settlement: one is money paid to the state, and the other is an outside review of how the firm staffs its monitoring and handles cybersecurity (source: NYDFS, Consent order).
Why were the 2019 compliance certifications a problem?
Robinhood Crypto certified in 2019 that it complied with New York's transaction-monitoring and cybersecurity rules. Under those rules, a company should certify only when its program fully complies, and the department found the programs deficient at the time. That made the certifications improper, and the finding sits beside the staffing and monitoring findings as a problem with what the firm told its supervisor (source: NYDFS, August 2, 2022).
What consumer-complaint gap did the New York exam find?
The examination found that Robinhood Crypto's website lacked a telephone number for customer complaints. New York's virtual currency rule requires every licensee to show such a number clearly on its website as a consumer-protection measure, so the gap counted as a violation in its own right, alongside the larger compliance findings in the settlement. If you need to raise a complaint today, use the contact options the app and website show you now (source: NYDFS, Consent order).
When did the SEC crypto subpoenas start?
The SEC began sending Robinhood Crypto investigative subpoenas in December 2022, asking about the cryptocurrencies it supported, how it held them and how the platform operated. Those requests for information came well before the May 2024 Wells Notice, and they mark the start of the inquiry that the February 2025 letter later closed. A subpoena asks for documents and answers, while a Wells Notice warns that staff may recommend a case (source: Robinhood Markets, 2025 10-Q).
Is Robinhood Crypto a registered or licensed business?
Robinhood Crypto is registered with FinCEN, the US Treasury's financial crimes unit, as a money services business (source: Robinhood, Crypto security). In New York it holds two licenses from the Department of Financial Services, one to conduct virtual currency business activity in the state and one as a money transmitter. Those licenses are what placed the firm under the department's supervision and made the 2022 examination possible (source: NYDFS, Consent order).
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. Updated October 2026. Primary sources: the SEC 8-K for May 4, 2024, Robinhood Markets' Form 10-Q filed May 1, 2025, and the New York Department of Financial Services release of August 2, 2022. All facts independently verified against cited documentation current as of September 2026.
This article is for informational and educational purposes only. It is not financial, investment, or trading advice. Crypto assets are highly speculative and can lose value. Do your own research and consult a qualified professional for advice on your situation.