Robinhood CEO Vladimir Tenev Criticizes Wells Notice Despite Strong Q1 Earnings

Chief
Executive
Officer
Vladimir
Tenev
addressed
the
robust
financial
performance
of
Robinhood
during
the
company’s
earnings
conference
for
the
first
quarter.
However,
the
company’s
success
was
overshadowed
by
a
recent
notification
that
Wells
got
from
the
Securities
and
Exchange
Commission
(SEC).
The
outstanding
results
that
Robinhood
revealed,
which
included
a
considerable
growth
in
the
amount
of
cryptocurrency
trading,
were
achieved
in
spite
of
the
regulatory
obstacles.

profit
for
the
First
Quarter
of
Robinhood:
Robinhood
has
revealed
significant
profit
results
for
the
first
quarter,
with
crypto-related
services
accounting
for
roughly
forty
percent
of
the
company’s
transaction-based
revenue
of
$329
million.
During
the
most
recent
quarter,
the
company
reported
a
net
income
of
$157
million,
marking
its
second
straight
successful
quarter.
The
reported
revenue
of
$618
million
was
higher
than
the
projections
by
more
than
15
percent,
indicating
that
this
performance
surpassed
the
expectations
of
the
industry.

surge
in
Cryptocurrency
Trading
Volumes:
During
the
first
quarter
of
2018,
Robinhood
saw
a
spectacular
surge
of
224%
in
the
volume
of
cryptocurrency
trading,
which
reached
$36
billion
.
It
is
important
to
note
that
the
overall
financial
performance
of
the
firm
was
significantly
influenced
by
the
spike
in
trading
activity.
Also,
the
company’s
income
tied
to
cryptocurrencies
showed
a
significant
surge
of
232%,
reaching
a
total
of
$126
million.

Wells
Notice
and
Regulatory
Challenges:
Despite
strong
financial
results,
Robinhood
was
served
with
a
Wells
notice
by
the
Securities
and
Exchange
Commission
(SEC)
that
targeted
its
cryptocurrency
listings
and
the
custodial
activities
that
were
carried
out
by
Robinhood
Crypto.
In
its
preliminary
finding,
the
Securities
and
Exchange
Commission
(SEC)
argues
that
the
corporation
has
violated
securities
laws,
which
may
result
in
an
enforcement
action
being
taken
against
the
company.
President
and
Chief
Executive
Officer
of
Robinhood,
Vladimir
Tenev,
voiced
his
dissatisfaction
with
this
new
development
during
the
earnings
call.

The
response
of
Robinhood
and
the
impact
it
has
had
on
its
customers
Jason
Warnick,
the
chief
financial
officer
of
Robinhood,
emphasised
that
the
firm
treats
its
cryptocurrency
business
with
the
same
legal
and
regulatory
requirements
as
it
does
its
brokerage
business.
There
is
a
clear
commitment
on
the
part
of
the
management
of
the
business
to
protect
the
company
and
advocate
for
its
consumers.
In
response
to
the
Wells
warning,
Robinhood
informed
its
consumers
that
the
notice
would
not
have
any
effect
on
their
accounts.

Robinhood’s
custody
of
cryptocurrency
assets
for
its
customers
surged
by
78%
compared
to
the
previous
quarter,
hitting
$26.2
billion.
This
growth
in
crypto
assets
and
user
base
is
a
result
of
the
company’s
extensive
user
base.
It
is
possible
to
ascribe
this
expansion
to
both
an
increase
in
market
prices
as
well
as
an
increase
in
deposits
of
cryptocurrency.
For
the
last
four
years,
Robinhood
has
been
able
to
accomplish
a
roughly
sevenfold
growth
in
income
and
a
threefold
increase
in
the
number
of
customers
it
serves.

Image
source:
Shutterstock

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