- The SEC’s investigation into Robinhood came shortly after FTX’s bankruptcy filing.
- Robinhood disclosed the investigation in its latest 10-K filing with the SEC.
- Earlier this month, the SEC fined US crypto exchange Kraken $30 million for violating securities laws.
The United States SEC (Securities and Exchange Commission) was investigating the digital asset business of the brokerage firm Robinhood, as the firm reported on February 28, 2023.
On Monday, Robinhood Markets Inc. revealed in a filing that in December last year, that the firm received an investigative subpoena from the SEC regarding its listing of cryptocurrencies and its custody of cryptos.
Robinhood 10K filing
The firm disclosed the investigation in its latest 10-k filing with the SEC. The SEC’s investigation into Robinhood came shortly after the bankruptcy filing of one of the largest crypto exchanges—FTX—and several other digital assets trading venues and lending platforms, such as Three Arrows Capital, Celsius Network, and Voyager Digital Holdings.
FTX filed for bankruptcy in November last year, prompting the interruption of regulators globally and hurting investor sentiment in the sector.
Robinhood mentioned in its announcement that, “In December 2022, following the 2022 Crypto Bankruptcies, we received an investigative subpoena from the SEC regarding, among other topics, RHC’s supported cryptocurrencies, custody of cryptocurrencies, and platform operations.” Here, RHC refers to Robinhood LLC.
The SEC has reportedly ensured that pre-existing securities laws also apply to cryptocurrencies and that many crypto tokens meet the definition of a security, which the crypto ecosystem has previously criticized.
According to the news source, Robinhood received a similar subpoena from the California Attorney General’s office in April 2021, seeking information regarding its crypto branch’s trading platforms, business and operations, security of customer assets, and listing of coins. The brokerage firm has said it is cooperating with the investigation.
Robinhood mentioned in its filing that if the SEC or a court finds any cryptocurrencies to be securities, the firm may be forced to cease trading those cryptos. Such action may result in regulatory penalties, customer liabilities and judicial or administrative sanctions.
According to the report, in early February, Robinhood revealed it planned to buy back its shares from Sam Bankman Fried’s Emergent Fidelity Technologies as US lawyers were seizing his shares.
On the Robinhood platform, there are 18 cryptocurrencies listed, including Ethereum, Bitcoin, Shiba Inu Tokens and Dogecoin. Investors can buy as little as $1 to start with digital assets.
As per a news agency, a spokesperson for the SEC declined to comment on it, whereas a Robinhood spokesperson said, “We have nothing additional to share here beyond what is in the filing.”
In January this year, the SEC charged Genesis and Gemini for allegedly offering unregistered securities. And earlier this month, it fined US based crypto exchange Kraken $30 million for violating securities laws.
Reportedly, Robinhood shares were down 0.5% in trading Monday after the filing.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.