Following Robinhood’s company-wide meeting to discuss business reorganization and further staff cuts. The company has announced that it will lay off 23%, or about 780 employees.
Robinhood continues to lay off 23% of employees
During a company reorganization meeting, Robinhood realized that cutting the previous 9% of staff “wasn’t enough to go far”. Therefore, the announcement that they will lay off 23%, or about 780 employees, was shared by Robinhood CEO Vlad Tenev.
The reason for this decision taken by the company is that inflation is at a 40-year high accompanied by a widespread crypto market crash, which has further reduced customer trading activity and assets under management.
“We have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody.”CEO Vlad Tenev said
In addition, the CEO of Robinhood also accepts responsibility for himself and the company because they have misjudged human resource needs.
“Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022. In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me.”
Around the same time as the announcement of the layoff, the Robinhood Stock and Cryptocurrency Trading Platform was fined $30 million by the New York State Department of Financial Services (NYDFS).
First, the NYDFS stated that Robinhood did not maintain enough staff to meet the rules under the Bank Secrecy and Anti-Money Laundering Act. Furthermore, the platform has failed to make proper upgrades to its transaction monitoring system to accommodate the growing size, trading volume, and customer profile.
In addition, Robinhood is also accused of having followed policies inconsistent with NYDFS virtual currency and cybersecurity regulations. The regulator says Robinhood even lacks a dedicated contact phone line on its website for customer complaints, making user protection inadequate.
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