Robinhood’s crypto trading arm has agreed to a
$3.9 million settlement with the California Department of Justice over violations related to preventing users from withdrawing digital assets.
What Happened?
Between 2018 and 2022, Robinhood allowed users to buy cryptocurrencies without letting them withdraw those assets. Users were forced to sell their holdings back to Robinhood if they wanted to exit the platform, violating California’s Commodity Code.
Along with the financial penalty, Robinhood must now improve its platform to allow users to withdraw their crypto assets and ensure transparency in trading and pricing.
Misleading Customers
Robinhood was also found to have falsely advertised that it would connect to multiple trading venues to offer competitive prices, a claim the California DOJ said was misleading. Additionally, some assets were stored with third-party venues without informing customers.
This settlement comes on the heels of a
$9 million fine that Robinhood paid in July for sending unsolicited text messages to customers as part of a referral program.
Read more at Decrypt.
