Robinhood under fire: Illicit crypto funds & regulatory fines

The community speculates that Robinhood may have been at the center of the movement of illicit crypto funds. The allegation has yet to be officially proved, but it carries a lot of weight for one to consider the chances. TruthLabs, a user on X, said that there is a high chance that illicit funds did move through or are hidden in Robinhood.

For starters, they have highlighted the findings of Sunil, an FTX creditor champion. Sunil said that a total of $544 million in FTX customer funds moved to Robinhood. That was chosen as the last destination to store funds through multiple channels. This included FTX as the starting point, followed by Almeda, Special Purpose Vehicle, and finally to Robinhood.

As a matter of fact, TruthLabs has also included the name of Gemini in the explanation. They said Gemini funded $400 million in ETH to the wallet that originally funded the Robinhood public exchange. The same wallet was later used to transfer $140 million to Bitmart Exchange Exploiter.

Robinhood has been fined a couple of times in the past. In June 2021, FINRA sanctioned the company with a fine of $57 million, forcing it to shed away $13 million in restitution to clients who were affected by misleading communication and outages in March 2020. That amount turned out to be the largest fine by FINRA ever.

The cryptocurrency division of Robinhood was then fined $30 million in August 2022. The New York State Department of Financial Services sanctioned the fine. It was done so under the allegations of violating AML and cybersecurity regulations, with AML being short for anti-money laundering. That was the department’s first-ever crypto enforcement action.

On May 1, 2023, Robinhood falsely added the Bankruptcy tag to AMC stock.

All of it has been backed by the community, with many members saying that Robinhood is involved but does not get lawsuits into its hands. Others have started questioning the legitimacy of existing crypto entities. It all started with the collapse of FTX. It practically brought Sam Bankman-Fried to the ground.

SBF was convicted of misappropriating customers’ funds. While he maintained his defense, the courts found him guilty of the charges and sentenced him to prison. That further marked the bearish trend in the cryptosphere. Many tokens lost their value, and many broke down from their ATH.

The market has started to recover, especially after the approval of the Spot Bitcoin ETF. It could still use more optimistic pictures to convince people to board the ship and fuel mass adoption.

TruthLabs previously shared proof of the Ethereum Foundation’s involvement in the Gatecoin hack in 2016. This pertains to the theft of 185k ETH tokens from Gatecoin. For reference, one ETH is currently worth $3,056.80, with a rise of 0.91% in the last 24 hours.

Trevor Holman

Trevor Holman follows crypto industry since 2011. He joined CryptoNewsZ as a news writer and he provides technical analysis pieces and current market data. He is also an avid trader. In his free time, he loves to explore unexplored places.

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