Robinhood settles with California’s Department of Justice with $3.9M for accusations between 2018 and 2022.
Rob Bonta, Californian Attorney General accused Robinhood of breaching state commodities law.
Robinhood Crypto LLC, a subsidiary of Robinhood Markets, has reached a $3.9M settlement with California’s Justice Department. The settlement follows allegations that the platform prevented customers from crypto withdrawal from their accounts between 2018 and 2022, violating state laws.
California Attorney General, Rob Bonta accused Robinhood of breaching state commodities laws by forcing customers to sell their crypto back to the platform instead of allowing them to withdraw their assets.
The platform advertised that it connected customers to multiple trading venues to secure competitive prices. Additionally, in some instances, third-party venues held the assets without customers’ knowledge.
Under the terms of the August 31 settlement, Robinhood has agreed to allow customers to withdraw their crypto to personal wallets and improve transparency regarding its trading practices and custody of assets. The company did not admit or deny wrongdoing but has agreed to comply with these changes moving forward.
Robinhood’s general counsel, Lucas Moskowitz, expressed satisfaction stating,
“We are pleased to put this matter behind us. The settlement fully resolves the Attorney General’s concerns related to historical practices, and we look forward to continuing to make crypto more accessible and affordable to everyone.”
Robinhood Stock Dips Following The Settlement
Despite the settlement, Robinhood’s stock (HOOD) experienced only a minor decline, closing down 1.34% at $19.11 on September 4, followed by a slight recovery during after-hours trading.
This settlement comes at a time when Robinhood’s market faces heightened scrutiny from regulators. In May, the U.S. Securities and Exchange Commission (SEC) signaled its intention to sue Robinhood over potential violations of federal securities laws related to its crypto operations.
By resolving the issue, the company aims to improve transparency, allowing users greater control over their assets while continuing to expand access to cryptocurrency trading.
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