Robinhood’s Crypto Unit Faces $10M Penalty Over Money Laundering Violations

By Sunil Sharma
Published July 7, 2021 Updated July 7, 2021
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Robinhood’s Crypto Unit Faces $10M Penalty Over Money Laundering Violations

By Sunil Sharma
Published July 7, 2021 Updated July 7, 2021

“Robinhood Crypto” the cryptocurrency brokerage unit of trading app Robinhood is facing a $10 Million penalty by New York regulators. Robinhood Crypto is penalized for allegedly violating state rules on cybersecurity and anti-money laundering.

Robinhood Unable to Get Over GME & Dogecoin (DOGE) Saga

In January 2021, GameStop (GME) stock suffered a short squeeze primarily driven by a reddit group called Wallstreet aimed to bleed hedge fund and institutional short sellers. This group majorly consists of retail investors and Robinhood was one among key platforms where trading volumes were broke all time highs.

Similarly, following endorsements from Elon Musk retail interest in cryptocurrency Dogecoin (DOGE) spiked and reached an all time high price of $0.73. Dogecoin trading volume at Robinhood were off the charts as Dogecoin entered top 5 cryptocurrencies.

Source: Coinmarketcap

During the period Robinhood suffered several technical glitches and also halted crypto deposits. Traders were specifically barred from trading in Dogecoin (DOGE) at several occasions. This soon caught regulator attention and Robinhood was charged whooping $70 Million for technical outages and missteps related to options trading.

Regulations to Tighten Up Amid Rising Criminal Hacking

The final penalty amount may well exceed $15 Million and Robinhood may face tougher cybersecurity guidelines moving ahead. In its regulatory filing with SEC Robinhood said,

“certain deficiencies in our policies and procedures regarding risk assessment, lack of an adequate incident response and business continuity plan, and deficiencies in our application development security,”

Last week Robinhood warned users about cyberattacks and informed that its bottom line might be affected. Also Robinhood user accounts were compromised last year and since then SEC, the Financial Industry Regulatory Authority and New York state are all investigating Robinhood.

The regulatory concerns are also a direct result of hacks of colonial pipeline and meatpacker JBS SA,  the incidents that disrupted US supply chains. The rising threat of criminal hacks and cryptocurrency ransoms is leading to more strict and tougher cyber compliance for companies like Robinhood.


The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Sunil Sharma
287 Articles
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO's in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at)

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