The Securities and Exchange Commission is looking into Robinhood Markets Inc.’s cryptocurrency operation, the latest indication that the regulator is looking more closely at virtual asset platforms.
According to a filing from Menlo Park, California-based Robinhood, the brokerage got an investigative demand in December pertaining to its cryptocurrency listings and custody, among other things. The SEC investigation came soon after the bankruptcy filing of the cryptocurrency exchange FTX, which sparked a wave of regulatory action.
The investigation takes place as US financial watchdogs approach cryptocurrencies more aggressively in the aftermath of FTX’s demise. Leading financial watchdogs have spread out across the industry in the months since FTX’s bankruptcy in November, obtaining significant fines and giving broad warnings.
A SEC spokesperson declined to respond. Requests for comment from a Robinhood representative were not immediately entertained.
Users can trade a number of cryptocurrencies on Robinhood, including Shiba Inu tokens, Dogecoin, Ethereum, and Bitcoin. Robinhood, which targets small traders, profited from a wave of cryptocurrency investment during the pandemic. However, this enthusiasm has been waning in the wake of a number of high-profile failures, including the failures of the lenders Voyager Digital Ltd. and Celsius Network and the hedge fund Three Arrows Capital.
The catastrophic collapse of FTX in November had far-reaching effects. As contending parties fought for control over the stake, Robinhood stated in an earnings statement earlier this year that it is seeking to repurchase shares of its business that disgraced former FTX CEO Sam Bankman-Fried previously controlled.