Dan Gallagher’s Testimony
Dan Gallagher, Robinhood’s chief legal officer, testified before the House Agriculture Committee on Tuesday that the stock trading app was “actively reviewing” tokens the Securities and Exchange Commission deemed were securities in lawsuits against Binance and Coinbase.
Robinhood’s Delisting Decision
On Friday, Robinhood, which recently expanded into crypto, said in an update on its website that it will delist Solana’s SOL, Cardano’s ADA, and Polygon’s MATIC beginning June 27 at 6:59 p.m. ET. Users will be able to buy and sell the tokens up until the end of June. However, come then, any existing tokens in a user’s wallet “will be sold for market value.”
“Earlier this week the SEC sued crypto companies Binance and Coinbase and alleged that a number of cryptocurrencies are unregistered securities. This includes Solana (SOL), Polygon (MATIC), and Cardano (ADA), which are currently supported on the Robinhood Crypto platform,” the company wrote in a message to its users. “This introduced a cloud of uncertainty around these assets, and as a result, our team has decided to end support for them.”
Response from Involved Parties
A spokesperson for Polygon Labs did not immediately return a request for comment. Neither did the Solana or Cardano foundations, but in a statement issued to Fortune yesterday, a spokesperson for Solana said it “strongly believes that SOL is not a security.”
Impact on Token Prices
Prices of those tokens didn’t move significantly after Robinhood notified its users on Friday morning. However, since the SEC singled out Solana, Polygon, and Cardano earlier this week, their prices have plummeted. SOL was down approximately 12% from Monday to Thursday afternoon. MATIC was also down about 12%, and ADA dropped 5%. The three tokens are in the top 10 in total market capitalization among all cryptocurrencies, according to CoinMarketCap.
SEC Lawsuits against Binance and Coinbase
The sudden pivot in the fortunes of Solana, Polygon, and Cardano follow the SEC’s two blockbuster lawsuits on Monday and Tuesday. In its suit against Binance, SEC Chair Gary Gensler said: “Through 13 charges, we allege that [CEO Changpeng] Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
In less aggressive language, Gensler also said that Coinbase did not comply with U.S. securities law. “Coinbase’s alleged failures deprive investors of critical protections, including rulebooks that prevent fraud and manipulation, proper disclosure, safeguards against conflicts of interest, and routine inspection by the SEC,” he said in a statement.
Tokens Identified as Securities
Central to both lawsuits are the agency’s allegations that 13 tokens, which include SOL, ADA, and MATIC, are securities. Others singled out were SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.