Robinhood is a popular trading app that allows users to invest in stocks, ETFs, and cryptocurrencies. The company has made headlines recently due to its ties with FTX and its role in the WallStreetBets situation. Additionally, Robinhood has recently come under scrutiny from the Securities and Exchange Commission (SEC) regarding its crypto business.
In December 2022, Robinhood received a subpoena from the SEC regarding its crypto listings and custody of assets. The company disclosed this information in its most recent 10-K filing with the SEC. The subpoena covers Robinhood’s “supported cryptocurrencies, custody of cryptocurrencies, and platform operations.”
Robinhood currently lists 18 cryptocurrencies on its trading platform, including Bitcoin, Ethereum, and Dogecoin. Investors can buy as little as $1 to get started with digital assets. The company has experienced “hyper growth” during the COVID-19 pandemic due to low interest rates, stimulus checks, and the ease of its app.
Robinhood’s ties to FTX have also garnered attention. FTX, a digital asset exchange, experienced a collapse in November 2022 after admitting that it did not have one-to-one reserves of customer assets and could not honor withdrawals. The company’s ex-boss, Sam Bankman-Fried, now faces 12 criminal charges. Robinhood had previously announced a partnership with FTX in 2021 to provide its users with access to FTX’s cryptocurrency futures products.
Robinhood’s role in the WallStreetBets situation also made headlines in early 2021. The company faced backlash from retail investors after it halted trading of GameStop and other stocks that had been targeted by the WallStreetBets subreddit. Robinhood was accused of protecting hedge funds and institutional investors at the expense of retail investors.
The SEC’s crackdown on the cryptocurrency industry has also impacted Robinhood. The Commission has been taking a tough stance on unregistered securities and has hit Genesis, Gemini, and Kraken with charges for offering unregistered securities. SEC Chair Gary Gensler has made it clear that he believes essentially everything in the crypto market except Bitcoin fits the description of an unregistered security.
In conclusion, Robinhood is a popular trading app that has experienced significant growth due to its ease of use and access to stocks, ETFs, and cryptocurrencies. However, its ties to FTX, its role in the WallStreetBets situation, and its recent subpoena from the SEC regarding its crypto business have all brought negative attention to the company. As the SEC continues its crackdown on the cryptocurrency industry, it remains to be seen how Robinhood and other companies will be impacted.