Robinhood Reaches Court Settlement With California Authorities
05.09.2024 17:00 2 min. read Alexander Stefanov
Robinhood's crypto division has wrapped up an investigation into its past practices, agreeing to pay a $3.9 million fine following allegations that it did not allow customers to withdraw cryptocurrency from 2018 to 2022.
In a statement released Wednesday, California Attorney General Rob Bonta announced that the state’s Department of Justice had reached a $3.9 million settlement with Robinhood. The investigation found that customers were restricted from withdrawing their crypto holdings, which forced them to sell them back to the exchange in order to withdraw from the platform. The ministry’s statement reads:
Robinhood misled customers by promoting the idea that it would connect with multiple trading platforms to provide the best available prices, which was not always the case.
Bonta stressed that this decision should serve as a clear warning:
Whether you are a traditional retail trader or a cryptocurrency platform, compliance with California’s consumer and investor protection laws is a must.
As part of the terms of the agreement, Robinhood is required to allow customers to withdraw their crypto holdings and transfer them to external wallets. The company must also clearly disclose that it will store the crypto assets and may delay settlement if network security concerns arise.
On Wednesday, Robinhood’s price fell 1.34% to close at $19.11 on Nasdaq.
The company appears to be redoubling its focus on cryptocurrencies. In June, Robinhood revealed plans to acquire crypto exchange Bitstamp, with the deal expected to be finalized by mid-2025.
In the second quarter of this year, Robinhood’s revenue from crypto transactions grew to $81 million, marking a 161% year-over-year increase.
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