Robinhood fined $30 million, attempts to cut 23% of workforce to weather the winter

Robinhood is a well-known online brokerage in the United States, named after the legendary outlaw from medieval England, Robin Hood, with the intention of emulating his spirit of robbing the rich to give to the poor by returning the excessive fees charged by Wall Street back to customers. It is known for its zero minimum account balance and commission-free trading, which has stirred up a lot of discussion and received mixed reviews since its launch. Recently, Robinhood's cryptocurrency trading division was fined $30 million by the New York State Department of Financial Services (NYDFS) for allegedly violating anti-money laundering (AML) and cybersecurity regulations.

Robinhood is a well-known online brokerage in the United States, named after the medieval English outlaw known for his robbing the rich to give to the poor spirit, aiming to return the excessive fees charged by Wall Street back to customers. With its key features of no minimum account balance and zero commission fees, it has been a topic of continuous discussion since its launch, receiving both praise and criticism.

Recently, Robinhood's cryptocurrency trading division was fined $30 million by the New York State Department of Financial Services (NYDFS) for alleged violations of anti-money laundering (AML) and cybersecurity regulations.

According to The New York Times, this case marks the first enforcement action by the New York State Department of Financial Services against a cryptocurrency division. Superintendent Adrienne A. Harris aims to provide more guidance for the cryptocurrency industry and expand the regulatory team's involvement in virtual currencies. "When someone violates the law or department regulations, the New York State Department of Financial Services will continue to investigate and take action, which is crucial to protecting consumers and ensuring the safety and soundness of institutions," Harris stated in a statement.

In addition to the fine, Robinhood is required to hire an independent consultant to assess its compliance with NYDFS regulations.

"We are pleased to have this matter resolved and to have it serve as the foundation of our legal and cybersecurity programs," stated Cheryl Crumption, Robinhood's legal counsel. Following regulatory intervention, the company has established a leading industry compliance and cybersecurity department to continue providing the best service to consumers. Robinhood, which gained fame due to the GameStop short squeeze incident, attracted a large number of young Americans to the market with its no minimum account balance and zero commission fees, and has been actively expanding its cryptocurrency trading. According to its recent quarterly report, cryptocurrency trading accounts for approximately 20% of the company's trading revenue, maintaining this level despite significant fluctuations in the cryptocurrency market over the past year.

The report also reveals the company's future direction, such as the upcoming launch of a cryptocurrency wallet and airdrops in August.

Recent market volatility has led to a sharp decline in Robinhood's stock price, dropping from a peak of $85 last year to below $10. Robinhood recently announced a 23% staff reduction to achieve cost savings.

Co-founder and CEO Vlad Tenev announced that all departments would be affected. Tenev cited the reason for the layoffs as, "The macro environment has further deteriorated, with inflation reaching a 40-year high, accompanied by a decline in the overall cryptocurrency market, leading to further reductions in customer trading activities and custodied assets." This round of layoffs is the second for Robinhood this year, as the company had already cut approximately 9% of its staff in April. The company's efforts to control costs can be seen through its net revenue losses, as Robinhood is trying various means to move towards profitability.

On June 28, Bloomberg reported that sources revealed FTX was considering acquiring Robinhood internally. Given the current bear market in cryptocurrencies, FTX is actively engaging in acquisition or investment discussions with various companies, and FTX founder SBF's acquisition of a 7.6% stake in Robinhood has sparked discussions. However, FTX founder SBF denied this rumor to the media, stating that while FTX is optimistic about the future of Robinhood and potential cooperation between the two parties, there have been no active acquisition discussions with Robinhood. Robinhood declined to comment on this news.