Robinhood's cryptocurrency trading subsidiary once blocked customers from withdrawing tokens they had purchased. While Robinhood Crypto LLC abandoned that policy in 2022, its past practices on Wednesday resulted in a $3.9 million fine from the state of California.
The California Department of Justice has settled an investigation into what Robinhood's general counsel called "historic activities" in the popular trading app's cryptocurrency business from 2018 to 2022.
The state’s investigation has been looking at the cryptocurrencies that users can buy and sell through Robinhood as commodities. By allowing customers to buy cryptocurrencies but not allowing them to hold the assets themselves, the company violated California’s commodities law, according to a press release from the California Department of Justice.
Under the settlement, Robinhood must continue to allow customers to withdraw cryptocurrency from the app and update disclosures related to its custody practices. Robinhood Crypto previously disclosed that it had received multiple subpoenas from the California Attorney General regarding its trading platform, business practices, and coin listings — as well as its disclosures and custody of customer assets.
“There is no further investigation and this resolves the California Attorney General’s investigation,” a Robinhood spokesperson said.
“We are pleased to have this matter closed,” Lucas Moskowitz, legal counsel for Robinhood Markets, said in an email. “This settlement fully addresses the Attorney General’s concerns regarding past practices, and we look forward to continuing to make cryptocurrencies more accessible and affordable for everyone.”
Robinhood Crypto is currently facing its own scrutiny from the U.S. Securities and Exchange Commission (SEC), which announced in May that it was preparing to file a lawsuit against the company for violations of federal securities laws.
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