US Securities and Exchange Commission (SEC) have launched an investigation into the activities of popular stock and crypto trading firm, Robinhood, forcing it to postpone the date for its Initial Public Offering (IPO) launch. The IPO launch was supposed to take place after the July 4 holidays celebrating the declaration of America’s independence. Reports indicate that the stock and crypto firm will be unable to launch its IPO after the Independence holidays, following the SEC’s inquiry into its crypto business.
A Thursday report issued by Bloomberg stated that the US SEC has been beaming its searchlight on Robinhood’s crypto business. Bloomberg’s report further stated that the firm had been working towards the IPO since March, expanding its staff strength and listing more cryptocurrency pairs on its app for trading. The firm also planned to add deposits and withdrawals services on the app. Robinhood posted a massive increase in the number of users on its platform within the first two months of 2021. From a sprawling 401,000 users last year to additional 6 million users in 2021. According to a report, more people were buying coins on the platform.
Robinhood Files Public Listing Application in March
Robinhood Markets Inc. had filed for a public listing in March with the intention of going public in June, according to reports. However, the firm shifted the proposed June listing to next month, which does not seem feasible anymore following the US SEC’s investigation into the firm. The public listing would enable investors to be able to purchase the firm’s shares or stocks. Although experts posited that Robinhood had destroyed any fighting chance of a public listing after the Dogecoin and GameStop saga.
GME Stock Delisting In January Draws Investors’ Ire
In January, Robinhood had delisted GameStop’s stock on its platform, thereby earning it criticisms from investors and traders. At the time, GameStop, a retail video game and electronics store in the US, had gotten support from a subreddit (WallStreetbets) on the social app, Reddit. Members of the subreddit had pumped the price of the GME stock as a revenge act against institutional investors and Wall Street traders who short-sold the stock. The price of GameStop (GME) stock moved from $5 to $285 by over 2000%. The delisting of the GME stock by Robinhood had caused so much outrage. The platform also delisted popular meme-based token, Dogecoin.
Robinhood has been caught in a series of unsavoury events this year. Despite this, its customer base was not affected but experienced more increase over the past months. The firm’s CEO also hinted at introducing digital wallets, however, he said this may not be done anytime soon as they are still considering the risks involved. In April, the firm was accused by Massachusetts regulators of exposing new traders and investors to some trading services. Lately, the US SEC has been actively regulating crypto-related activities and also refused to approve applications for crypto ETFS.
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