the crypto-broker must pay $45 million in penalties

Robinhood has agreed to pay 45 million dollars in combined civil penalties, as ordered by the United States Securities and Exchange Commission (SEC). From what has emerged, Robinhood Securities LLC and Robinhood Financial LLC have violated more than 10 distinct securities law provisions. 

Robinhood and the agreement with the SEC for 45 million dollars in combined civil penalties

The Securities and Exchange Commission (SEC) of the USA strikes again in the crypto world, this time it was the turn of the crypto-broker Robinhood. 

In a press release from the SEC on January 13, it emerged that the two Robinhood companies violated more than 10 securities law provisions.

The two broker-dealer companies accused are Robinhood Securities LLC and Robinhood Financial LLC.

Here is how the text reads:

“Today’s order establishes that the two Robinhood companies did not comply with a wide range of significant regulatory requirements, including the failure to accurately report trading activity, non-compliance with short sale rules, timely filing of reports on suspicious activities, maintaining books and records, and safeguarding customer information”.

To resolve this series of accusations regarding its brokerage operations, Robinhood has agreed to pay 45 million dollars in combined civil penalties. 

Specifically, Robinhood Securities has agreed to pay a penalty of 33.5 million dollars, while Robinhood Financial has agreed to pay 11.5 million dollars. Both penalties must be paid by January 27.

Robinhood and the agreement with the SEC: what are the accusations?

In general, the SEC would have investigated the broker-dealer to ensure it met its legal obligations, finding various shortcomings. In fact, in the list of accusations against Robinhood, several “oversights and concessions” emerged. 

Among other things, the SEC describes that from January 2020 to March 2022, Robinhood allegedly did not promptly investigate suspicious transactions. From April 2019 to July 2022, Robinhood allegedly did not implement policies and procedures to protect its customers from the risk of identity theft. 

In fact, in November 2021, it was found that a third party had gained unauthorized access and managed to download information related to millions of individuals who had provided such information to Robinhood.

Other oversights then concern the long-term retention of electronic communications and off-channel communications. Not only that, Robinhood also failed to retain some of the communications with its brokerage clients, as required by law between 2020 and 2021.

The SEC then identified that only Robinhood Securities would have sent at least 11,849 Electronic Blue Sheets (formal requests for information to the SEC), which contained inaccurate information or omissions. Another violation concerns the “Regulation SHO,” a rule aimed at regulating abusive short selling practices. 

New Year’s Day 2025 and the distribution of 2.5 million dollars in BTC

The current fine of 45 million dollars came only after Robinhood had decided to celebrate the beginning of 2025 in an extraordinary way. 

In fact, at the beginning of this month and this year, Robinhood distributed 2.5 million dollars in Bitcoin to its Gold users. 

This is an initiative that aims to reward the most loyal customers of the platform, at a time when the price of BTC was fluctuating at its historical highs.

From what has emerged, it seems that the rewards were also executed in Dogecoin (DOGE) and were given to all those who visited the New Year’s countdown screen.