- Robinhood LLC settles with the State of California for $3.9 million.
- The settlement resolves allegations of freezing crypto withdrawals from 2018 to 2022.
- The firm will allow customers to withdraw funds to their personal wallets.
Robinhood Markets’ crypto arm settled with the State of California for $3.9 million, resolving allegations that the platform halted crypto withdrawals for almost four years. This marks the California Department of Justice’s first public action against a crypto firm, with California Attorney General Rob Bonta alleging Robinhood Crypto LLC violated commodities laws.
The Attorney General asserted that the platform violated the commodities laws by not providing customers with the cryptocurrencies they bought. The firm forced its clients to sell their assets and exit the platform, leaving them unable to withdraw the funds from 2018 to 2022.
Bonta accused Robinhood Crypto LLC of allegedly deceiving its customers by claiming to hold their cryptocurrencies, though in some cases, other platforms held the assets. Additionally, the Attorney General criticized the company for deceptive advertising, exposing its tactics of misleading customers with claims of connecting to multiple trading venues for competitive prices.
According to the settlement agreement dated August 31, 2024, Robinhood has neither admitted nor denied the accusations. In addition to the monetary penalty, they consented to the court’s order to allow customers to withdraw funds to their personal wallets.
Furthermore, Bonta underscored that the settlement serves as a warning. His statement stresses the necessity for all businesses, including crypto firms, to comply with California’s customer and investor protection laws. In a separate statement, Robinhood’s general counsel, Lucas Moskowitz, expressed the crypto company’s pleasure in the settlement and highlighted its goal of making cryptocurrency more accessible and affordable for all.
As for Robinhood’s shares, it fell by 1.34% to $19.11 on September 4. During after-hours trading, the shares slightly rose by 0.16 to $19.14. Despite this minor recovery, Robinhood’s shares have still surged by approximately 54.5% year-to-date.
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