TLDR
Robinhood has agreed to a $9 million settlement over unsolicited text messages sent through its referral program.
The lawsuit claimed Robinhood violated Washington state’s consumer protection laws.
The settlement covers approximately 827,327 consumers who received text messages between August 2017 and February 2024.
Each participating member is expected to receive between $111 and $170.
Robinhood, the popular crypto and stock trading platform, has reached a $9 million settlement in a class-action lawsuit over unsolicited text messages sent through its referral program.
The settlement, approved by Judge Barbara J. Rothstein of the U.S. Western District Court of Washington, resolves claims that Robinhood violated Washington state’s consumer protection laws.
The lawsuit, filed by plaintiffs Cooper Moore and Andrew Gillette, alleged that Robinhood’s referral program violated the Washington Commercial Electronic Mail Act and the Washington Consumer Protection Act.
The program allowed existing users to send referral text messages to their contacts, inviting them to join the platform. When recipients clicked on the referral link and signed up, both the referrer and the new user would receive a reward in the form of free stock.
The settlement covers approximately 827,327 consumers who allegedly received text messages on Washington area code telephone numbers between August 2017 and February 2024. Judge Rothstein found the terms of the settlement “reasonable and adequate in light of the complexity, expense, and duration of the litigation.”
Each participating member is expected to receive a cash payment between $111 and $170, depending on the number of validated claims. Over 51,000 claims have been submitted, with the notice plan approved by the court reaching 96% of the identified settlement class members.
“This is an excellent result for the approximately 827,327 consumers who allegedly received Robinhood referral text messages,” the motion read.
The court also approved $2,250,000 in attorneys’ fees and $142,400 in litigation expenses from the settlement fund. Moore and Gillette, the lead plaintiffs, were granted $10,000 each in service payments for their roles in the case.
Bitstamp Acquisition
This settlement comes at a time when Robinhood is making significant moves in the cryptocurrency space.
The company recently announced plans to acquire Bitstamp Ltd., one of the oldest cryptocurrency exchanges, in a deal valued at $200 million. Expected to close in the first half of 2025, this acquisition marks Robinhood’s entry into the institutional crypto market and signifies a major expansion of its global footprint.
Bitstamp, established in 2011, operates worldwide with offices in Luxembourg, the UK, Slovenia, Singapore, and the US. Through this acquisition, Robinhood aims to leverage Bitstamp’s extensive regulatory approvals and established presence across key markets to bolster its international expansion.
Johann Kerbrat, General Manager of Robinhood Crypto, emphasized the strategic value of the acquisition:
“Bitstamp’s globally trusted exchange has demonstrated resilience across various market cycles. By integrating their customer-centric approach with our platform, we aim to enhance safety and user experience, solidifying our reputation among both retail and institutional investors.”
The Bitstamp acquisition will allow Robinhood to offer an expanded portfolio of over 85 crypto assets, including innovative staking and lending products.
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