Vlad Tenev, the CEO of Robinhood, said in a press statement on Tuesday that the firm will cut its workforce by about 23%.
Operations, marketing, and program management will see the majority of the layoffs. Tenev attributed the problem to “deterioration of the macro climate, with inflation at 40-year highs and a wide crypto market fall” in the press statement. In April, Robinhood had already let go of 9% of its workers.
According to Tenev’s announcement, the retail trading giant will streamline its organizational structure and give new general managers extensive authority over all of its divisions. After a Thursday all-hands meeting to address the change, he said that the impacted employees will be informed through email and Slack message whether they were being let go or still had a job.
Additionally, the business released its second quarter financial report one day early than anticipated:
- Revenue: $318 million vs. $321 million estimated, according to Refinitiv
- Loss: 34 cents per share vs. 37 cents estimated, according to Refinitiv
In what seems to be an assumption that we are all dumb and cannot read financial reports, Robinhood announced that its quarterly earnings were better than the previous quarter and that it was happy, completely disregarding the fact that the transaction-based revenue generated by Robinhood in the second quarter of 2022 decreased by more than half, from $451 million to $202 million. The total revenue situation isn’t much better: down 44% from $565 million to $318 million a year ago.
Did they announce their reporting earlier than expected, to cover up other news? Who knows. On Tuesday, the New York State Department of Financial Services (NYDFS) stated that the risks associated with compliance and cybersecurity were not adequately addressed by Robinhood Crypto. And as a result, New York State’s financial regulator has fined the crypto arm of Robinhood Markets Inc $30 million for alleged violations of anti-money-laundering, cybersecurity and consumer protection rules. The fine isn’t much. But being publically found guilty of violating financial regulations, is a price they probably didn’t want to pay.
Cheryl Crumpton, associate general counsel for litigation and regulatory compliance at Robinhood, stated on Tuesday, “We are pleased the settlement in principle reached last year and previously disclosed in our public filings is now final.
According to Crumpton, the business has made “significant progress” in developing its legal, regulatory, and cybersecurity procedures.
According to the NYDFS, Robinhood Crypto would also be obliged to hire an impartial expert to assess its compliance procedures as part of the settlement.