Nasdaq-listed Robinhood Markets Inc., which runs Robinhood's cryptocurrency and stock trading app, received an investigative subpoena from the US Securities and Exchange Commission (SEC) in December related to its trading and handling of cryptocurrencies, the company said in its annual report. 10-K filing on financial performance filed with the SEC agency on Monday.
See related article: US authorities to seize $460 million of Robinhood shares in FTX fraud case
Fast facts
- The investigative subpoena relates to Robinhood's "cryptocurrency listings, cryptocurrency custody, and platform operations," according to the filing.
- Robinhood said the subpoena was received in December as the SEC increased its scrutiny of the cryptocurrency industry following a series of bankruptcies in 2022, including the collapse of Bahamas-based cryptocurrency exchange FTX.com in November.
- The company said it had received similar subpoenas from the California Attorney General's office regarding its "business platform, business and operations, custody of customer assets, customer disclosures, and coin listings." He said that he was cooperating with all of these investigations.
- The firm described the SEC subpoena on page 28 of the filing in a section outlining the potential risks to the company if the SEC changes its classification of a particular cryptocurrency to a security.
- "The status of any particular cryptocurrency as a 'value' is subject to a high degree of uncertainty and if we have not adequately characterized one or more cryptocurrencies, we could be subject to regulatory scrutiny, investigations, fines and other sanctions," Robinhood said.
- He SEC fined US crypto exchange Kraken used $30 million in early February for offering its โparticipation as a serviceโ program, which the agency said violated the Securities Act. Kraken subsequently shut down its staking service.
- The agency too charged cryptocurrency lender Genesis Global Capital and crypto exchange Gemini Trust in January alleging that the company's "Earn" lending program amounted to offering and selling unregistered securities.
- Robinhood became a popular app for stocks and cryptocurrencies thanks to its low trading fees. However, the company's crypto earnings fell 24% to $39 million in the fourth quarter of 2022, according to its latest earnings report.
See related article: Robinhood aims to buy back its shares seized by the Justice Department in the FTX ruling
