Robinhood says cooperating with SEC in probe of cryptocurrency services

Nasdaq-listed Robinhood Markets Inc., which runs the Robinhood fairness and crypto buying and selling app, acquired an investigative subpoena from the U.S. Securities and Change Fee (SEC) in December associated to its buying and selling and dealing with of cryptocurrencies, the corporate mentioned in its annual 10-Ok submitting on monetary efficiency submitted to the SEC company on Monday.

See associated article: U.S. authorities to grab US$460 mln of Robinhood shares in FTX fraud case

Quick details

• The investigative subpoena pertains to Robinhood’s “cryptocurrency listings, custody of cryptocurrencies and platform operations,” in response to the submitting.
• Robinhood mentioned the subpoena was acquired in December because the SEC elevated its scrutiny of the crypto business following a sequence of bankruptcies in 2022, together with the collapse of Bahamas-based crypto alternate FTX.com in November.
• The corporate mentioned that it had acquired comparable subpoenas from the California Lawyer Basic’s workplace about its “buying and selling platform, enterprise and operations, custody of buyer belongings, buyer disclosures, and coin listings.” It mentioned it was cooperating with all these investigations.
• The agency described the SEC subpoena on web page 28 of the submitting in a piece outlining potential dangers to the corporate ought to the SEC change its classification of a selected cryptocurrency to being a safety.
• “Any specific cryptocurrency’s standing as a “safety” is topic to a excessive diploma of uncertainty and if now we have not correctly characterised a number of cryptocurrencies, we is perhaps topic to regulatory scrutiny, investigations, fines, and different penalties,” Robinhood mentioned.
• The SEC fined U.S. crypto alternate Kraken US$30 million in early February for providing its “staking as a service” program, which the company mentioned was in breach of the Securities Act. Kraken subsequently shut down its staking service.
• The company additionally charged cryptocurrency lender Genesis World Capital and crypto alternate Gemini Belief in January alleging the agency’s “Earn” lending program equated to providing and promoting unregistered securities.
• Robinhood grew to become a well-liked app for shares and cryptocurrencies by its low buying and selling charges. Nonetheless, the corporate’s crypto earnings fell 24% to US$39 million within the fourth quarter of 2022, in response to its newest earnings report.

See associated article: Robinhood goals to buy-back its shares seized by Division of Justice in FTX failure