Robinhood’s Crypto Trading Faces Regulatory Hurdles with SEC Subpoena
Robinhood, the popular fintech company, has been subpoenaed by the U.S. Securities and Exchange Commission (SEC) regarding its cryptocurrency services, according to an annual financial filing released on Monday.
The company has admitted that this legal action could potentially result in the suspension of its digital asset trades as part of its obligation to disclose potential risks to its business.
Robinhood received the subpoena after crypto exchange FTX filed for bankruptcy in November, requesting information on “cryptocurrency listings, custody of cryptocurrencies, and platform operations.”
Robinhood stated that it facilitates trades for certain crypto that it believes are not securities under U.S. federal and state securities laws.
Despite a 24% dip in crypto trading revenue in the fourth quarter, Robinhood has seen a growing business line in crypto trading over the past year. Its crypto trading volumes on the platform recovered in January, jumping 95%.
This is not the first time Robinhood has faced legal action. The SEC charged the company in 2020 for misleading customers about revenue sources, and it agreed to pay $65 million to settle those charges in December 2020.
Additionally, Robinhood was fined $30 million in August for failing to comply with anti-money laundering and cybersecurity regulations by the New York Department of Financial Services.