Robinhood, the popular trading app, disclosed her recent 10-K filing states that she received a subpoena from the Securities and Exchange Commission (SEC) in December 2022.
The subpoena asked for information about Robinhood’s listings of cryptocurrencies, the holding of cryptocurrencies, and the operations of the platform.
The subpoena comes after a turbulent year in the cryptocurrency market, with several major trading and lending platforms filing for bankruptcy, including FTX and Three Arrows Capital. Robinhood’s share price also suffered in November 2022, dropping 18% on the day FTX stopped withdrawals from its platform by all non-fiat clients.
Robinhood’s policies and procedures are designed to assess the likelihood that a particular cryptocurrency may be considered a security under applicable law. However, the company has stated that these assessments are not definitive legal definitions, leaving the company vulnerable to legal or regulatory action if a cryptocurrency backed by its platform is determined to be a security under US law.
If the SEC or a court determines that any of the cryptocurrencies supported by the Robinhood platform are securities, the company may be denied facilitating the trading of those cryptocurrencies.
It remains to be seen how this subpoena will affect Robinhood’s cryptocurrency business, but it serves as a reminder of the regulatory risks associated with the rapidly changing and evolving cryptocurrency market.
This is far from the company’s first encounter with a formidable regulator. In late 2020, the SEC charged Robinhood Financial with repeatedly making false statements and not disclosing payments received from trading firms for redirecting customer orders to them. The SEC alleges that Robinhood misled customers between 2015 and the end of 2018 by reporting its largest source of revenue. Robinhood agreed to pay $65 million to settle the charges, without acknowledging or denying the SEC’s findings.
Having capitalized on the Dogecoin craze in 2021, Robinhood has greatly expanded the list of available cryptocurrencies on its platforms.
Credit : u.today
