The SEC Issued A Subpoena To Robinhood Regarding Its Cryptocurrency Services

Robinhood, the trading app and brokerage, revealed in its annual financial filing on Monday that the U.S. Securities and Exchange Commission (SEC) had issued a subpoena relating to its cryptocurrency services. The company acknowledged the possibility of legal action by the SEC, which could result in it discontinuing digital asset trades on its platform. 

As part of its required disclosure of risks to its business, Robinhood stated that if the SEC or a court determines that any cryptocurrencies supported by its platform are securities, it may no longer be able to facilitate trading of those cryptocurrencies. This could include ceasing support for such cryptocurrencies on its platform.

Robinhood indicated in its financial filing that it had received the subpoena following the November bankruptcy filing of crypto exchange FTX. The subpoena pertains to various aspects of its cryptocurrency business operations, including the listing of cryptocurrencies, custody of digital assets, and platform operations. 

In the same filing, Robinhood clarified that it enables its customers to trade in certain cryptocurrencies that have been scrutinized using internal policies and procedures, and that the firm believes are not classified as securities under relevant U.S. federal and state securities laws.

In the event that the SEC pursues legal action against Robinhood, it would not be the first instance of the regulator taking the company to court. Robinhood was charged by the agency in 2020 for providing misleading information to customers about its revenue sources. 

The company agreed to pay $65 million to settle these charges in December of that year. Additionally, Robinhood was fined $30 million in August by the New York Department of Financial Services as part of a settlement for reportedly violating anti-money laundering and cybersecurity regulations.