Robinhood Markets Inc., the firm behind the popular trading app, said today that it was subpoenaed by the Securities and Exchange Commission in December.
The company disclosed the investigation in its most recent 10-K filing with the SEC. In it, the company lists among the various disclosures of potential risks to its business a subpoena from the SEC regarding Robinhood’s “supported cryptocurrencies, custody of cryptocurrencies, and platform operations.”
Robinhood currently lists 18 cryptocurrencies on its trading platform, including Bitcoin, Ethereum, and Dogecoin. Investors can buy as little as $1 to get started with digital assets.
A subpoena requires a person to appear before a court to testify or produce documentation when an investigation is active. Robinhood said it received similar subpoena requests from the California Attorney General’s office regarding its trading platform, custody of customer assets, customer disclosures and coin listing. It added that it is cooperating with California’s investigation.
“We have nothing additional to share here beyond what is in the filing,” a Robinhood spokesperson told Decrypt.
The company went through a period of “hyper growth” during the COVID-19 pandemic, thanks to low interest rates, stimulus checks, and the ease of its app which allows retail investors to buy and sell both stocks and cryptocurrencies like Bitcoin.
The move from the SEC is the latest in a tough crackdown against the cryptocurrency industry following the collapse of digital asset mega exchange FTX last year.
FTX crashed in November after the company admitted that it did not have one-to-one reserves of customer assets and could not honor withdrawals. Prosecutors allege the exchange, which let users buy, sell, and bet on the price of a number of cryptocurrencies, was criminally mismanaged.
Its fresh-faced ex-boss Sam Bankman-Fried, who was once perceived as the do-gooder of the crypto world, now faces 12 criminal charges, including conspiracy to make unlawful political contributions and defraud investors.
FTX’s collapse has forced regulators to move faster on controlling a fast-moving and convoluted space in the name of protecting investors.
The SEC in particular is on the prowl: SEC Chair Gary Gensler wants to crack down on all the coins and tokens he believes are unregistered securities—and he’s made it clear that he believes essentially everything in the crypto market except Bitcoin fits that description.
In January, the Commission hit Genesis and Gemini with charges for offering unregistered securities. And earlier this month, it fined American crypto exchange Kraken $30 million for violating securities laws.