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Stock-trading app Robinhood plans to cut almost a quarter of its staff, and its cryptocurrency unit has been sued for “serious violations of anti-money laundering, cybersecurity and consumer protection” in a New York financial institution. Fined $30 million by the Department of Services (DFS).
Robinhood cuts 23% of staff, crypto sector fined $30 million
The decision to cut 23% of its workforce follows a “broader reorganization of the company into a general manager structure,” said Robinhood CEO Vlad Tenev.
Teneff, who announced the transition to employees, said employees in operations, marketing and program management functions would be particularly affected.
Affected staff will have the opportunity to remain employed at Robinhood until October 1, 2022 and receive their normal salary and benefits.
The news follows previous layoffs in April, when the company cut 9% of its full-time workforce. These cuts “weren’t enough,” Tenev now says.
In his latest letter to employees, Teneff said that the macro environment will further deteriorate, with inflation at a 40-year high accompanied by a widespread cryptocurrency market crash, which will reduce client trading activity. and assets under custody are further reduced.
In this new environment, we are more than adequately staffed and operating. As CEO, I have approved and held an ambitious staffing trajectory. says Tenev.
Under the new general manager setup, GM will have “wider responsibility” for the company’s individual businesses.
This change flattens the hierarchy, reduces cross-departmental dependencies, and removes redundant roles and positions, says Tenev.
Another headache for Robinhood is that its cryptocurrency division was fined $30 million by DFS in New York State.
The Department alleges that Robinhood failed to maintain an effective and compliant Bank Secrecy Act (BSA), AML, and cybersecurity program and violated consumer and reporting requirements.
As a result of its investigation, DFS said it found “serious flaws” in Robinhood Crypto’s BSA/AML compliance program, including its transaction monitoring system, and “serious flaws” in its cybersecurity program.
As with penalties, Robinhood must retain an independent consultant to assess the company’s compliance with DFS regulations and efforts to correct shortcomings in that regard.
Adrienne Harris, director of DFS, said Robinhood Crypto failed to invest adequate resources to develop and maintain a culture of compliance.
All cryptocurrency companies licensed in New York State are subject to the same anti-money laundering, consumer protection, and cybersecurity regulations as traditional financial services companies, Harris adds.
