SEC Drops Robinhood Crypto Case, Mirroring Coinbase Outcome

• The SEC has ended its investigation into Robinhood’s crypto division without taking enforcement action.
• Robinhood shares rose over 3% in pre-market trading, recovering from last week’s 8% decline.
• The SEC’s decision comes as it shifts its approach to crypto regulation under President Donald Trump.

Robinhood Crypto Probe Ends Without Charges

Robinhood said it received formal notice from the SEC’s Enforcement Division on Feb. 21 confirming the probe’s closure.

The regulator had previously warned in May 2024 that Robinhood could face charges over potential securities law violations tied to its crypto offerings. Despite the scrutiny, the company maintained that it had remained compliant with federal regulations.

The SEC’s reversal mirrors its recent decision to drop its case against Coinbase, a shift that marks a departure from the enforcement-heavy approach taken under former Chair Gary Gensler.

Investors reacted positively, sending Robinhood (HOOD) shares up more than 3% in pre-market trading after an 8% decline last week.

Crypto Boom Fuels Robinhood’s Growth

The timing is critical for Robinhood, as crypto has become a key driver of its business.

Dan Gallagher, Robinhood’s chief legal officer, welcomed the SEC’s decision, emphasizing the company’s adherence to securities laws.

In the final quarter of 2024, crypto trading revenue skyrocketed 700% to $358 million, making up more than half of the company’s $672 million in transaction-based revenue.

The regulatory relief could further strengthen Robinhood’s foothold in the crypto market.