Robinhood Crypto has reached a $3.9 million settlement with the California Department of Justice following an investigation into its practices regarding cryptocurrency withdrawals.
Robinhood Crypto has reached a $3.9 million settlement with the California Department of Justice following an investigation into its practices regarding cryptocurrency withdrawals.
The inquiry revealed that from 2018 to 2022, customers were unable to withdraw their cryptocurrencies and were instead compelled to sell them back to the platform.
California Attorney General Rob Bonta announced the settlement, emphasizing the importance of consumer protection in both traditional and digital marketplaces. The department's findings indicated that Robinhood misled users by promoting its service as connecting to various trading venues for competitive pricing, which was not always the case.
Under the terms of the settlement, Robinhood is required to implement measures that allow customers to withdraw their cryptocurrency assets and transfer them to external wallets.
The company must also provide clear disclosures regarding its custody of crypto assets and the potential for delayed settlements due to security concerns.
Lucas Moskowitz, Robinhood's general counsel, stated that the company is satisfied to have resolved the Attorney General's concerns regarding its historical practices. He expressed optimism about continuing to enhance accessibility and affordability in the cryptocurrency space.
Despite the settlement, Robinhood's stock dipped by 1.34% on Nasdaq, closing at $19.11 on Wednesday.
The company is reportedly expanding its focus on cryptocurrency trading, having announced plans to acquire crypto exchange Bitstamp, with the deal expected to finalize in the first half of 2025.
In the second quarter of this year, Robinhood reported a significant increase in crypto transaction-based revenues, which soared to $81 million, reflecting a 161% rise compared to the previous year.
This figure notably surpassed the company’s transaction revenues from equities during the same period.
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