What just happened? In a case of kicking someone when they're down, Robinhood, the company behind the popular investment app, has been hit with a $30 million fine just as it announced almost a quarter of its staff are being let go and a net loss of $295 million in Q2.
Starting with the staff-cut news, company CEO and co-founder Vlad Tenev announced that Robinhood would reduce its headcount by approximately 23% as part of a broader company reorganization into a General Manager structure.
Tenev said while all parts of the business will be affected, the main areas will be operations, marketing, and program management functions. The move comes just a few months after Robinhood laid off around 9% of its staff in April.
Like so many companies currently letting go of employees and streamlining, Tenev said the current economic turmoil and rising inflation played a significant part in the decision. The crypto crash is a big factor, too; the falling price of digital assets has also seen Coinbase and OpenSea cut staff.
Robinhood's second-quarter financial results didn't bring any good news, either. The company's revenue was down 44% year-on-year to $318 million, leading to a net loss of $295 million.
But Robinhood's woes haven't ended there. New York's top financial regulator has fined the company's crypto unit $30 million for alleged violations of anti-money-laundering and cybersecurity regulations.
The Wall Street Journal writes that The New York State Department of Financial Services found significant failures in the company's management and oversight of its compliance programs. A supervisory exam and investigation found Robinhood's Bank Secrecy Act and anti-money-laundering compliance program was insufficiently staffed and failed to move from a manual monitoring system following the company's increase in size.
Furthermore, the company's cybersecurity program failed to address its operational risks, and its policies didn't comply with the regulator's cybersecurity and virtual currency regulations. Robinhood also lacked a dedicated phone number on its website to receive consumer complaints.
In addition to the fine, Robinhood must retain an independent consultant to evaluate its actions in addressing the issues highlighted by the regulator.