The Securities and Exchange Commission (SEC) has issued a summons to the stock trading platform, Robinhood, after a crash that occurred on its platform in February. The crash, which was caused by a surge in trading volume on cryptocurrency exchange FTX, led to the loss of millions of dollars for investors.
The regulator is looking into whether Robinhood failed to properly monitor the activities of its users and whether it had adequate safeguards in place to prevent the crash.
The watchdog is also looking into whether Robinhood failed to inform its customers of the risks associated with trading on its platform. The SEC is seeking documents from Robinhood related to the incident, as well as information about its policies and procedures for monitoring customer trading activity.
The SEC is also seeking information about how Robinhood allocates its resources to ensure that its platform operates in a safe and efficient manner.
The document reads:
“To the extent that the SEC or a court determines that any cryptocurrencies supported by our platform are securities, this decision may prevent us from continuing to support trading in these assets and storage.”