By Mark Hunter
2 days agoThu Sep 05 2024 09:45:59
Reading Time: 2 minutes
- California Attorney General Rob Bonta has secured a $3.9 million settlement with Robinhood Crypto, LLC
- Robinhood was found in violation of California Commodities Law for misleading customers about the handling of cryptocurrency transactions.
- The settlement includes conduct requirements, including permitting customers to withdraw their cryptocurrency and improving transparency in trading practices
California Attorney General Rob Bonta yesterday announced that he has reached a $3.9 million settlement with Robinhood Crypto, LLC after an investigation revealed that the company prevented customers from withdrawing their crypto assets from 2018 to 2022. The settlement resolves violations of the California Commodities Law, where Robinhood misled customers about its trading practices and the custody of their assets. As part of the agreement, Robinhood must allow withdrawals and enhance transparency in its trading practices.
Robinhood Didn’t Give to the Poor
The California Attorney General revealed the settlement in a press release yesterday, in which the allegations were set out:
Robinhood misled customers by advertising it would connect to multiple trading venues, to ensure customers receive the most competitive prices between the venues, which was not always true. Robinhood also represented to its customers that Robinhood itself held all its customers’ cryptocurrencies purchased through Robinhood’s platform. Despite these assurances, Robinhood did not tell customers that there were instances in which it arranged for trading venues to hold customer assets for extended periods.
The extensive investigation also revealed that Robinhood violated the California Commodities Law by restricting customers from withdrawing their cryptocurrency assets between 2018 and 2022. During this period, customers were forced to sell their assets back to Robinhood instead of transferring them to external wallets.
California Breaks its Crypto Duck
As part of the settlement, Robinhood is required to permit customers to withdraw their cryptocurrency, ensure that its trading practices are transparent, and update its customer agreements to reflect any potential delays in settling transactions.
This case marks the first public action by the California Department of Justice against a cryptocurrency company, underscoring the state’s commitment to regulating emerging digital markets.
Attorney General Bonta noted that the settlement “sends a strong message that companies, whether traditional or digital, must adhere to California’s consumer protection laws.”
