On Monday, February 27, 2023, Robinhood disclosed in its recent 10-K filing that it received a subpoena from the SEC in December, a month after the monumental collapse of Sam Bankman-Fried’s FTX. This move was the latest in a strict crackdown targeted at regulating digital assets in the country.
The brokerage further disclosed that the subpoena was targeted at its cryptocurrency listings, custody, and platform operations.
A $57 million loss
Robinhood came under pressure earlier this year when it lost $57 million due to a glitch that allowed users of its trading platform to briefly short a meme stock.
Following the collapse of FTX in November, regulators have hit cryptocurrency firms with charges in an attempt to protect investors and improve their confidence.
Tougher regulatory actions against crypto firms
Worse still, the Chairman of the Commission remains a constant threat as he deems everything in the crypto market except Bitcoin as unregistered securities. Earlier in January, the SEC charged Genesis and Gemini for trading unregistered securities, while in February, Kraken was the next to feel the heat as the Commission slammed it with a fine of $30 million for violating securities regulations.
Also, Robinhood disclosed in a statement earlier this year that it would repurchase its shares, which were tied to its former CEO, Sam Bankman-Fried. The shares—a 7.6% stake in Robinhood that is worth over half a billion dollars—are the focus of a four-way legal tussle among Bankman-Fried, FTX’s new owners, BlockFi, and Yantan Ben Shimon.