The SEC is attacking crypto again, especially Robinhood

The US Securities and Exchange Commission (SEC) has subpoenaed a trading and brokerage app Robin Hood for its crypto services. The company disclosed this in an annual financial filing released on Monday.

The news is also reported by Watcher.Guru’s official Twitter account, which reads:

TUNE IN: 🇺🇸 SEC Subpoena Robinhood $HOOD above #cryptocurrency entries.

— Watcher.Guru (@WatcherGuru) 27 February 2023

Robinhood worried about its crypto trading after SEC actions

As expected, the SEC filed a subpoena against Robinhood shortly after FTX debacle.

The high-profile fintech company also acknowledged that the SEC’s legal action could lead to the cessation of digital asset trading on the platform as part of the mandatory list of risk to the business.

In fact, Robinhood stated the following:

“To the extent that the SEC or a court determines that cryptocurrencies supported by our platform are securities, such a determination may prevent us from continuing to facilitate trading in such cryptocurrencies (including ending support for such cryptocurrencies on our platform).”

Robinhood said it received the subpoena shortly after cryptocurrency exchange FTX applied bankruptcy in November. The subpoena covers information on topics such as cryptocurrency listings, cryptocurrency custody and platform operations.

Robinhood facilitates customer trades for certain cryptocurrencies that have been analyzed in accordance with applicable internal policies and procedures and that it believes are not securities under US federal and state securities laws.

This is what the company claims after the submission. Trading cryptocurrency on Robinhood has been one growing industry the last 12 months, despite the market downturn.

The investment platform launched its crypto wallet for 10,000 iOS users in September, by means of Circle’s USDC stablecoin as the main representative fiat token.

The story between the SEC and Robinhood

The company’s CEO, Vlad Tenev, pointed out that the collapse of FTX has led to Robinhood gaining more market share. Despite this, trading and sales of cryptocurrency fell in the fourth quarter 24%in line with most income lines.

However, cryptocurrency trading volumes on the platform rebounded in January, jumping 95% as cryptocurrency prices rose across the board. If the SEC takes legal action against Robinhood, it won’t be the first time the market regulator has taken the company to court.

The agency actually accused Robinhood in 2020 of misleading customers about sources of income. Robinhood agreed to pay 65 million dollars to settle these costs in December 2020.

Robinhood was also hit with one 30 million dollars fined in August as part of a settlement with the New York Department of Financial Services for allegedly failing to comply with anti-money laundering and cyber security regulations. The crypto company refused to comment beyond what was in the archive.

Robinhood crypto trading volume increases by 95% in January

Robinhood reported that crypto trading volume increased by 95% in January to 3.7 billion dollars from last month. Nominal trading volumes, which are the main driver of transaction revenue, were higher in January for stocks, options and cryptocurrencies than in December 2022.

Monthly active users (MAU) at the end of January were 12 million, up 600,000 from December. Assets Under Custody (AUC) at the end of January was total 74.7 billion dollarsup 20% from the end of December.

Net deposits were 1.4 billion dollars in January, giving an annual growth rate of 27% compared to the AUC in December 2022. Over the past twelve months, net deposits were 16.9 billion dollarswhich corresponds to an annual growth rate of 19% above the AUC for January 2022.

Margin balances at the end of January were 3 billion dollarsdown $0.1 billion from the end of December 2022. Cash Sweep balances at the end of January were $7.1 billion, up 1.3 billion dollars from the end of December 2022.

Of the $7.1 billion, $6.0 billion was in gold accounts, which were up 1.2 billion dollars from the end of December 2022. In addition, the shares were up almost 6% at the close.