Trading platform Robinhood Crypto expects to pay $30 million to settle anti-money laundering concerns with the New York State Department of Financial Services (NYDFS) — three times the company’s reported estimate earlier this month.
The Menlo Park firm’s fine came after a NYDFS investigation concluded in March that showed it failed to enact proper cybersecurity and anti-money laundering measures.
Outside of the fine, Robinhood Crypto must engage with a monitor to ensure its compliance moving forward.
In any case, reports indicate the company expects to list at up to $40 billion on the NASDAQ next week via an initial public offering (IPO).
That would make Robinhood about the same size as Walgreens-Boots Alliance and Electronic Arts.
Not just Robinhood Crypto
This isn’t the first time Robinhood has found itself in hot water recently.
In December, the firm settled with the US Securities and Exchange Commission (SEC) for $65 million. The SEC alleged Robinhood repeatedly misled customers about how it made money.
The markets watchdog took issue with Robinhood’s “commission-free trading” claim.
The app’s “payment for order flow” model means the company generates revenue by directing orders to certain market makers, often providing its customers with an inferior rate.
The SEC said Robinhood users lost $34.1 million as a result of its trading practices.
And last month, Robinhood reached a record-breaking $70 million deal with Financial Industry Regulatory Authority (FINRA).
The hefty settlement was ordered after several outages last March, which coincided with extreme COVID-related market volatility.
FINRA also claimed millions of Robinhood users were harmed when the company provided misleading communication and relied on algorithms to approve thousands for options trading when they weren’t qualified.
Robinhood heads for bumper IPO
Still, Robinhood’s userbase continues to grow.
Business of Apps estimates the app now has 20 million active users, double what it boasted in 2019.
Robinhood users are already reporting buy prompts for Robinhood stock set to execute on Thursday, July 29.
The company said it plans to offer 55 million shares next week, anticipating an initial price between $38 and $42. This provides Robinhood with an estimated $35 billion market value.
Robinhood was valued at just over $11 billion this time last year.