Robinhood Subpoenaed by SEC Over Brokerage’s Crypto Business

The logo of Robinhood Markets is seen at an event on Wall Street after the company’s IPO in New York City, on July 29, 2021. Photo: Reuters

Robinhood Markets said the US Securities and Exchange Commission is probing its cryptocurrency business, in the latest signal that the regulator is drilling deeper into virtual asset platforms.

The brokerage received an investigative subpoena in December related to its cryptocurrency listings and custody, among other topics, Menlo Park, California-based Robinhood said on Monday in a filing. The SEC inquiry came soon after cryptocurrency exchange FTX filed for bankruptcy, spurring a wave of regulatory action.

The probe comes as US financial watchdogs take a more aggressive approach to cryptocurrency in the wake of FTX’s collapse. In the months following FTX’s November bankruptcy, top financial watchdogs have fanned out across the industry, extracting major penalties and issuing broad warnings.

A spokesperson for the SEC declined to comment. A representative for Robinhood did not immediately respond to a request for comment.

Robinhood allows users to trade several cryptocurrencies, including Bitcoin, Ethereum, Dogecoin and Shiba Inu tokens. Catering to small traders, Robinhood benefited from a wave of cryptocurrency investing during the pandemic – but that enthusiasm has been drying up, following a string of high-profile failures that included hedge fund Three Arrows Capital and lenders Voyager Digital and Celsius Network.

The dramatic implosion of FTX in November had sweeping repercussions. Robinhood said in an earnings statement earlier this year that it is looking to repurchase shares of its company that FTX’s disgraced former chief executive Sam Bankman-Fried previously controlled, as sparring parties wrestled for control over the stake.