Dive Brief:

• Robinhood CFO Jason Warnick sold approximately $1.2 million in company shares Tuesday, according to a company filing. Warnick joined the investing platform in 2018 after a 20-year career at e-commerce giant Amazon, where he served in a variety of positions including as VP of finance and as chief of staff for Amazon’s CFO, according to a company biography.
• The sale follows shortly after the Securities and Exchange Commission officially dropped an investigation into the investing and stock trading platform’s cryptocurrency transactions, according to a company announcement Monday. The dropped investigation is the culmination of a years-long tug-of-war between the Menlo Park, California-based company and the regulator surrounding its cryptocurrency unit, stemming from a larger battle over whether certain digital assets should be considered securities. Last May, the SEC issued a “Wells Notice” to Robinhood, alleging the company’s crypto unit had violated federal securities law and notifying the investing platform of its preliminary decision to file an enforcement action, The Associated Press reported at the time.
• “Let me be crystal clear — this investigation never should have been opened,” Dan Gallagher, chief legal, compliance and corporate affairs officer for Robinhood Markets said in a statement included in the Monday announcement. “Robinhood Crypto always has and will always respect federal securities laws and never allowed transactions in securities.”

Dive Insight:

The dismissed action against Robinhood comes as the SEC cultivates a friendlier relationship with the cryptocurrency industry in the early days of Donald Trump’s second presidential term.

Following the departure of SEC Chair Gary Gensler — under whose leadership the SEC pursued an aggressive stance on crypto and securities — the administration has tapped crypto-friendly commissioner Mark Uyeda to serve as acting chair. Trump nominated Paul Atkins, also friendly to the industry, as Gensler’s successor, with Atkins’ approval pending, CFO Dive reported.

On Thursday, the SEC also announced it had officially dropped its investigation into cryptocurrency exchange Coinbase, pointing to the development of its new “Crypto Task Force” as a factor behind the decision, according to a press release. Its dismissal of the pending enforcement action against Coinbase “rests on its judgment that the dismissal will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry, not on any assessment of the merits of the claims alleged in the action,” the SEC said.

The SEC’s loosening grip on crypto could potentially signal a new era for crypto-friendly businesses such as Robinhood, which has repeatedly come under fire from U.S. watchdogs and lawmakers.

In June 2021, the platform was fined $70 million by the Financial Industry Regulatory Authority (FINRA) for system outages and misleading communications regarding a 2020 incident, according to a CNBC report. A record penalty issued by FINRA at the time, the watchdog ordered the platform to pay $57 million in fines, as well as $13 million in restitution to its affected clients.  

Also in 2021, the company became infamous for its role in the Gamestop “meme stock” short squeeze, in which Robinhood users artificially inflated Gamestop’s stock price through trades in volumes which swiftly overwhelmed the platform — causing it to halt trades of the stock as well as those of several other companies, according to a TechCrunch report.

In the aftermath, the platform fielded a class action lawsuit from users who claimed its halting of trades deprived them of potential gains, as well as questions over its decisions from lawmakers including Sen. Ted Cruz and Rep. Alexandria Ocasio-Cortez, CNN reported. The suit was eventually dismissed on appeal in 2023, The Wall Street Journal reported.

However, with the SEC adopting new leadership poised to ease its previous aggressive enforcement on the industry, Robinhood is now eyeing “aggressive” expansion in the cryptocurrency space, The Wall Street Journal reported.

The platform has already seen a boost to its crypto trading volumes in the short time following Donald Trump’s November election as president: for its fourth quarter ended Dec. 31, Robinhood reported cryptocurrencies revenue of $358 million — a 700% jump year-over-year, according to its earnings results.  

An SEC spokesperson declined to comment on the dropped investigations beyond public filings. Robinhood did not immediately respond to requests for comment.