Cryptocurrencies

Robinhood Q1 Cryptocurrency Trading Up 224% – SEC Action ‘Disappointing’

Robinhood Q1 Cryptocurrency Trading Up 224% – SEC Action ‘Disappointing‘ CEO Vladimir Tenev called Wells’s latest SEC notice a “disappointing development” during a first-quarter earnings call, as the company reported a 224% increase in cryptocurrency trading volumes in the quarter to $36 billion.

Robinhood Q1 Cryptocurrency Trading Up 224% – Sec Action 'Disappointing'
Robinhood Q1 Cryptocurrency Trading Up 224% – Sec Action ‘Disappointing’

Robinhood’s cryptocurrency-related services contributed nearly 40% of its $329 million in transaction-based revenue, helping the company post its second straight profitable quarter with net income of $157 million.

But the strong quarterly earnings results come in light of a Wells notice the US Securities Exchange Commission delivered to the company last week, targeting Robinhood’s cryptocurrency listings and custody operations.

Tenev said the news was a “disappointing development.”

The company’s CFO, Jason Warnick, stressed that the company has adopted a conservative approach to its currency listings and services and holds its cryptocurrency business to the same legal and compliance standards as its brokerage business.

“So it’s disappointing to see more regulation coming through here.”

However, Robinhood executives confirmed that customer accounts will not be affected by the development.

“We will defend the company and we will continue to defend our customers,” Tenev added.

Dilemma aside, Robinhood’s first-quarter performance exceeded industry expectations, with reported revenue of $618 million beating the investment research firm’s Zacks estimate of $534.5 million by 15.6%.

Robinhood shares rose as much as 7.3% to $19.15 in after-hours trading, but have since fallen to $18.55, according to Google Finance.

HOOD stock price changed on May 8. Source: Google Finance

Robinhood’s stock price is now up 44.3% year to date.

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Robinhood reported holding $26.2 billion worth of cryptocurrencies for users, representing a 78% increase from last quarter.

The large increase can be partly attributed to rising market prices, with Bitcoin (BTC) rising 65.1% to $69,700 during the quarter.

Robinhood launched its cryptocurrency unit in February 2018, offering Bitcoin and Ethereum (ETH) trading in several states. It has since expanded its offerings to Litecoin (LTC), Uniswap (UNI), Avalanche (AVAX), Chainlink (LINK) and many other tokens.

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