Robinhood receives investigative subpoena by SEC over crypto listing
- Robinhood was subpoenaed by the SEC over a cryptocurrency listing
- The subpoena was issued days after the collapse of the major crypto exchange – FTX
Robinhood, a leading American financial service provider, disclosed a subpoena by the United States Securities and Exchanges Commission (SEC). The disclosure made in the annual report stated that it received an investigative subpoena related to cryptocurrency listing and platform operations. Additionally, the firm also stated that its reputation could stand to take damage because of a “prolonged weakness” in the cryptocurrency market.
Currently, the financial service provider has 18 cryptocurrencies listed on its platform. But not all coins are available for trading in all states. Cryptocurrencies like Avalanche (AVAX), Cardano (ADA), Compound (COMP), Polygon (MATIC), Shiba Inu (SHIB), Solana (SOL), Stellar Lumens (XLM), Tezos (XTZ), and Uniswap (UNI) are not available for trading in New York. Whereas, Circle’s stablecoin USDC is not available for trading in New York and Texas.
Robinhood draws SEC’s attention over crypto matter
In its report published on February 27, 2023, Robinhood stated that it received an investigative subpoena in December 2022. This happened right after the collapse of a leading cryptocurrency exchange – FTX, and several other crypto-firms filed for bankruptcy. The company also highlighted that its stock had taken a hit by nearly 18 percent when FTX halted funds withdrawals in November 2o22. Robinhood said,
“shortly after FTX filed for bankruptcy on November 11, 2022, and following the bankruptcies of several other major cryptocurrency trading venues (…) we received an investigative subpoena from the SEC regarding, among other topics, RHC’s cryptocurrency listings, custody of cryptocurrencies, and platform operations.”
Moreover, the founder of FTX – Sam Bankman-Fried – owned 7.6 percent of Robinhood shares before the exchange went bust. The 55 million shares, worth nearly $575 million, are currently in the hands of the US Department of Justice. And, the firm is currently trying to purchase all or most of the shares held by the Justice Department. The decision to buy them was made by the Board of Directors in early February 2023.
Notably, Robinhood is not the first crypto service provider to receive a subpoena from the SEC. In August 2022, Coinbase, a leading U.S.-based crypto exchange, disclosed an SEC subpoena. This too was related to its cryptocurrency listing and operations.