Crypto Moves – Robinhood slashes 23% of workforce and fined $30m for violations

RIYADH: Bitcoin, the leading cryptocurrency internationally, traded higher on Wednesday, rising by 0.01 percent to $22,847, as of 7:56 a.m. Riyadh time.

Ethereum, the second most traded cryptocurrency, was priced at $1,615 rising by 2.61 percent, according to data from Coindesk.

Robinhood to slash 23 percent of its workforce after revenue drop

As it announced its earnings a day early, Robinhood Markets Inc. reduced 23 percent of its staff due to declining trading activity and a 44 percent drop in revenue, according to Reuters.

The company was scheduled to report earnings on Aug. 3 but released them a day early after publishing a blog post about the reorganization and job cuts.

In its latest filing with the US Securities and Exchange Commission, Menlo Park, California-based brokerage reported net revenue of $318 million, down from $565 million a year earlier.

In addition to the 9 percent of full-time staff laid off earlier this year, the company will lay off 780 more employees. As part of its efforts to drive greater cost discipline, it will also change its organizational structure.

Compared to the same period last year, Robinhood’s total operating expenses increased 22 percent. Approximately $30 million to $40 million will be spent on the reorganization, Robinhood said.

There was a net loss of $295 million for the company. According to Refinitiv IBES data, excluding restructuring charges, Robinhood’s loss per share was 32 cents, compared with analyst expectations of 37 cents.

Robinhood’s shares were down nearly 1 percent at $9.15  in after-hours trading.

In Robinhood’s three main business lines of options, equities, and cryptocurrencies, transaction-based revenues fell 55 percent, with crypto transaction revenues declining 75 percent.

In the second quarter of 2021, Robinhood had 21.3 million monthly active users, while in June 2022, the number dropped to 14 million.

New York State’s financial regulator fines Robinhood $30m

A financial regulator in New York State fined Robinhood Markets Inc’s crypto arm $30 million for alleged violations of anti-money laundering, cybersecurity, and consumer protection rules, Reuters reported.

Robinhood Crypto did not allocate enough resources to compliance and cybersecurity risks, according to the New York State Department of Financial Services.

Since last year’s meme stock frenzy, the online trading app has been the subject of several regulatory probes.

Cheryl Crumpton, associate general counsel of litigation and regulatory enforcement at Robinhood said: “We are pleased the settlement in principle reached last year and previously disclosed in our public filings is now final.”

As Crumpton pointed out, the company has made “significant progress” in building its legal, compliance, and cybersecurity programs.

NYDFS also said Robinhood Crypto would need to hire an independent consultant to assess its compliance practices as part of the settlement.

– With input from Reuters.