In the most recent turn of events, on February 27, 2019, Robinhood Markets was served with a subpoena from the United States SEC over the SEC’s investigation into the company’s cryptocurrency operations.
According to the report filed (1) with the SEC, Robinhood was served with this subpoena in December 2022, one month after the cryptocurrency exchange FTX declared bankruptcy.
The subpoena addresses various topics, including “cryptocurrency listings, ownership of coins, and platform operations,” amongst others.
According to the statement made by Robinhood, the SEC subpoena was issued due to multiple crypto companies filing for bankruptcy in the fourth quarter of 2022. In the filing, it says:
“In December 2022, after the 2022 Crypto Insolvencies, we got an investigation summons from the SEC about, among many other issues, RHC’s sponsored crypto, custodian of cryptocurrencies, and platforms operations,” said the statement.
It is highly unlikely that this is the first occasion that a government agency in the United States has indeed served Robinhood a subpoena.
Back in April of 2021, the office of the California Attorney General served Robinhood with a subpoena demanding testimony.
At the time, the cryptocurrency regulator sought information regarding the trading system, coin listings, safety of client assets, and custody of customer assets offered by Robinhood.
A fine of thirty million dollars was levied against Robinhood by the New York District of Financial Services (NYDFS) in August of the previous year for failing to “spend the required resources and attention to build and sustain a culture of compliance.”
Will Robinhood Stop Dealing in Cryptocurrencies?
In its submission, Robinhood stated that a significant amount of what happens next depends on the Securities and Exchange Commission’s determination of whether the crypto it offers falls within the definition of securities.
In that case, Robinhood might be required to discontinue trading in those digital assets.
In addition, regulation penalties, client obligations, and legal or administrative consequences could be incurred due to such an action taken by the SEC.
Subpoenas for investigative purposes are typically issued by the courts in response to requests made by third parties, be they individuals or organizations.
In order to determine whether or not they wish to pursue additional legal action against a person or business that has been subpoenaed, the goal is to acquire the essential preliminary information.
Currently, 18 distinct cryptocurrencies may be traded on the Robinhood platform. Some of these cryptocurrencies are Bitcoin, Ethereum, and Dogecoin. Investors can launch their careers with as little as one dollar’s worth of digital assets to begin their careers.
Throughout the COVID outbreak, Robinhood experienced significant growth thanks to stimulus checks, historically low loan rates, and the simplicity of its software.
Trading in cryptocurrencies on the platform picked up almost immediately after it was released due to the considerable liquidity that existed during this period.