• The US Securities and Exchanges Commission (SEC) is investigating Robinhood Markets Inc. for its crypto activities, as listed in its 10-K filing.
• Robinhood received an investigative subpoena from the SEC in December 2022 and another subpoena from the California Attorney General’s office regarding its trading platform and customer disclosures.
• Robinhood offers low-interest rates and lists 18 cryptocurrencies on its trading app, including Ethereum (ETH), Bitcoin (BTC), and Dogecoin (DOGE).
Investigation of Robinhood by US SEC
Robinhood Markets Inc. disclosed investigation by the US Securities and Exchange Commission (SEC) in its most recent 10-K filing with the SEC. The firm was issued with an investigative subpoena on December 22 just after the collapse of FTX, indicating a major regulatory crackdown against the cryptocurrency industry in the United States of America.
Risks to Business
The subpoena from the SEC was related to „supported cryptocurrencies, custody of cryptocurrencies, and platform operations“. A subpoena normally requires the respondent to appear before a court and testify for an ongoing investigation. Furthermore, Robinhood also received another subpoena from the California Attorney General’s office regarding its trading platform, custody of customer assets, customer disclosures and cryptocurrency listing. As such, these potential risks were disclosed by Robinhood in their 10-K filing with SEC as potential risks to their business.
Crypto Trading Services offered by Robinhood
At present time, Robinhood lists 18 cryptocurrencies on its trading app including Ethereum (ETH), Bitcoin (BTC), and Dogecoin (DOGE) in addition to stocks. It became very popular during COVID-19 pandemic due to offering easy way to start trading, low interest rates and stimulus checks.
Regulatory Crackdown
The move by SEC is latest against a series of crackdowns against cryptocurrency industry following collapse of FTX exchange and bankruptcy filings from several other crypto firms operating in USA region. This shows that US regulators are taking serious steps towards regulating crypto industry which could have positive implications for investors safety in long term perspective.
Cooperation with Investigations
Robinhood has stated that it is cooperating with both investigations conducted by US SEC as well as California Attorney General’s office at this time. It remains to be seen whether investigations will result into any penalties or not but it certainly indicates that companies need to take precautionary measures while dealing with digital currencies so they can avoid any legal implications later on down road .