Alert: Robinhood Expects $15M Fine For Crypto Business

If you’ve been following tech and business news lately, you should be aware that Robinhood, the popular app for trading…

If you’ve been following tech and business news lately, you should be aware that Robinhood, the popular app for trading stocks and cryptocurrency, filed for an IPO barely a week ago. The company filed for that shortly after it agreed to pay a $70mn fine to settle allegations of improper conduct, a fine levied by the US Financial Industry Regulatory Authority (FINRA).

The $70mn fine followed a $65mn fine levied by the SEC on Robinhood several months before. As it is, Robinhood has been caught up in major litigation for sidestepping usual regulations for brokers of its kind as the company grew at breakneck speed.

Now, it appears that Robinhood isn’t even done paying fines in the short term. Buried in the trove of text in the company’s S-1 filing (which we analyzed earlier) indicates that it has set aside $15mn as a penalty it expects to pay for an unspecified probe into its crypto business.

Robinhood set aside $15mn for a settlement with the New York State Department of Financial Services (NYDFS) for a case not specifically disclosed but notes that it relates to “anti-money laundering and cybersecurity-related issues”. From that wording, it may be that Robinhood was charged with not adhering to anti-money laundering disclosure rules and cybersecurity negligence on its crypto trading business.

There’s even no guarantee that the $15mn Robinhood has set aside would be the monetary penalty it’s ordered to pay. The final figure could be lower or higher depending but nonetheless imply that Robinhood’s legal woes are costing it much money.

In its S-1 filing, Robinhood disclosed that it’s currently facing a total of 49 plaintiff lawsuits and regulatory inquiries into its activities. The company has received inquiries from among others the US Justice Department and the US Attorney’s Office for the Northern District of California which executed a warrant where the mobile phone of its CEO, Vlad Tenev, was seized.

With the $15mn set aside, it seems that Robinhood expects to be fined at least $150mn in the span of less than a year. Who knows what may be coming next? as the company still has many legal cases on its neck.

Though, Robinhood is a company that brought in $959mn in revenue for 2020 and raised $3.4bn from investors just this February, so the fines won’t at all break the company’s bank.