Robinhood Receives SEC Investigative Subpoena Into Crypto Business

Robinhood Markets, the popular brokerage house known for its commission-free trading, recently revealed that it received an investigative subpoena from the United States Securities and Exchange Commission (SEC) in December 2022. The subpoena was related to its listings of cryptocurrencies, custody services and platform operations. This came after several major cryptocurrency trading venues and lending platforms filed for bankruptcy earlier in the year, including FTX, Three Arrows Capital, Voyager Digital Holdings, and Celsius Network. The SEC’s investigation into Robinhood’s crypto business is aimed at obtaining the information needed to decide whether to take legal action against the company.

This is not the first time that Robinhood has come under scrutiny for its crypto business. In April 2021, the California Attorney General’s Office issued subpoenas seeking information about Robinhood’s crypto trading platform, business and operations, custody of client assets, and coin listings. In August 2021, the New York District of Financial Services fined Robinhood’s cryptocurrency division $30 million for failing to invest adequate resources and attention in developing and maintaining a culture of compliance. Additionally, the Massachusetts Division of Securities examined Robinhood in August 2021 for allegedly targeting inexperienced investors.

The SEC investigative citation highlights the regulatory challenges facing the crypto industry, as regulators seek to clamp down on fraud and protect investors. The SEC has been increasingly active in going after companies that violate securities laws in the crypto industry. For example, in December 2021, the SEC filed a lawsuit against Ripple Labs, alleging that its XRP token was an unregistered security.

Robinhood’s cryptocurrency business has been growing rapidly, and the company has added several new cryptocurrencies to its platform in recent years. However, the regulatory scrutiny and fines imposed on the company have raised concerns about the company’s culture of compliance and its ability to navigate the regulatory landscape. The company has stated that it is committed to complying with all applicable laws and regulations and is working to improve its compliance infrastructure.

In conclusion, the recent SEC investigative subpoena is a reminder of the challenges facing the crypto industry and the importance of compliance in the sector. Robinhood’s crypto business is under scrutiny, and the firm must continue to invest in compliance infrastructure to ensure it meets regulatory requirements. As the crypto industry continues to evolve, regulatory scrutiny is likely to increase and companies must be prepared to navigate this complex landscape.