Robinhood settles for $3.9M in California over crypto restrictions
Robinhood Crypto LLC has agreed to a $3.9 million settlement with the State of California following an investigation by the California Attorney General’s office.
The investigation concluded that Robinhood violated state commodities law by preventing customers from withdrawing cryptocurrency from their accounts between 2018 and 2022.
Under the terms of the settlement, Robinhood must allow customers to withdraw their crypto assets to their own wallets and update its disclosures related to trading and custody practices.
This settlement addresses past issues with Robinhood's handling of cryptocurrency transactions and aims to ensure greater transparency and consumer protection moving forward.
California's Department of Justice found that Robinhood sold commodities contracts without delivering the underlying crypto assets to its customers.
Instead, users had to sell their crypto back to Robinhood to exit the platform.
The investigation also revealed that Robinhood misled customers by claiming to connect to multiple trading venues to secure competitive prices while failing to disclose arrangements that involved holding customer assets for extended periods.
California Attorney General Rob Bonta emphasised the importance of compliance in both traditional and digital markets, stating, “Whether you’re a brick-and-mortar store or a cryptocurrency company, you must adhere to California’s consumer and investor protection laws.”
Robinhood’s chief legal officer, Lucas Moskowitz, referred to the conduct in question as “historical practices” and expressed the company's satisfaction in resolving the matter.
The settlement not only involves a financial penalty but also requires Robinhood to maintain ongoing crypto withdrawals and provide clearer disclosures to its users.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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