Vlad Tenev admitted that an earlier reduction of 9% of Robinhood's staff "did not go far enough," and the company has been affected by a further deterioration of the macro environment.
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Robinhood has been dealt a double blow — with the company unveiling plans to lay off hundreds of staff in the wake of a $30 million fine.
New York's Department of Financial Services said the penalty was being imposed on Robinhood's crypto division for "significant" anti-money laundering, cybersecurity and consumer protection violations.
A settlement means the fintech company will also be required to hire an independent consultant to ensure Robinhood complies with regulations going forward. Adrienne Harris, the Superintendent of Financial Services, said in a statement:
"As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance — a failure that resulted in significant violations of the department’s anti-money laundering and cybersecurity regulations."
An investigation revealed that Robinhood Crypto's AML program was "inadequately staffed" and its transaction monitoring system had "significant deficiencies."
In separate developments, Robinhood's CEO has told his workforce that the company is planning to reduce its headcount by 23% — and while all divisions will be affected, those in operations, marketing and program management are going to be hardest hit.
Vlad Tenev admitted that an earlier reduction of 9% of Robinhood's staff "did not go far enough," and the company has been affected by a further deterioration of the macro environment, with inflation continuing to run hot and a crypto market crash reducing customer trading activity. An update sent to all employees explained:
"I want to acknowledge how unsettling these types of changes are. We often talk about our mission to democratize finance for all, and one of the most cherished aspects of Robinhood is the teamwork and camaraderie involved in working towards our mission — together. I feel incredibly privileged and fortunate to have the opportunity to build with all of you."
Tenev added that Robinhood had been staffed on the assumption that "heightened retail engagement" seen during 2021, driven by everything from meme stocks to the crypto bull run, would continue into this year. He wrote:
"As CEO, I approved and took responsibility for our ambitious staffing trajectory — this is on me."
Back in June, Coinbase's CEO Brian Armstrong admitted that his exchange had made similar mistakes. After announcing its workforce would shrink by 18%, he said the trading platform "grew too quickly" and had "over-hired."
