Today, Robinhood Markets Inc., the firm behind the widely-used trading app, announced that it was subpoenaed by the Securities and Exchange Commission back in December.
Robinhood recently made a disclosure in its 10-K filing to the SEC, which revealed that they are currently undergoing an investigation. The subpoena was related to Robinhood’s listed cryptocurrencies like Bitcoin, Ethereum, and Dogecoin, as well as its crypto custody services and platform operations.
Robinhood Had Hypergrowth During the Covid Era
To aid in any ongoing investigations, a subpoena will demand that someone present themselves to court and provide testimony or documents. Recently, Robinhood received similar requests from the California Attorney General’s office regarding its trading framework, customer asset storage policies, consumer disclosures, and coin listing practices – an investigation they are actively complying with. A representative for the company stated: “We have nothing additional to share here beyond what is in the filing.”
During the COVID-19 pandemic, this company experienced massive growth due to low interest rates, stimulus payments, and its convenient app that allows everyday investors to buy stocks and cryptocurrencies such as Bitcoin.
FTX’s Collapse Caused SEC to Be Tougher
The SEC’s action is the most recent in a series of stringent measures taken against the cryptocurrency sector following FTX’s digital asset exchange crash last year.
In November, FTX was brought to its knees after the company confessed that it lacked individual reserves of customer assets and could not fulfill its withdrawals. Prosecutors affirm that this exchange, which enabled customers to acquire, sell, and bet on different cryptocurrencies’ prices, was criminally neglected. Its former CEO Sam Bankman-Fried — formerly seen as a crypto industry hero — is now charged with 12 criminal accusations, including conspiracy for illegal political contributions and deceiving investors.
The sudden collapse of FTX has prompted regulators to expedite their efforts in controlling the ever-changing and complicated crypto space to safeguard investors. Notably, Gary Gensler, Chairperson at the SEC, is on a mission to clamp down on digital currencies that are unregistered securities — as it appears from his standpoint that nearly every virtual asset apart from Bitcoin could be deemed as such.
In January, the Commission charged Genesis and Gemini with violations for providing unregistered securities. Subsequently, this month, American cryptocurrency exchange Kraken was fined $30 million by the Commission due to breaching security laws.
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