Robinhood’s cryptocurrency division has agreed to pay a $3.9 million fine to resolve an investigation opened by the California Department of Justice (DOJ) into restrictions placed on customers’ cryptocurrency withdrawals between 2018 and 2022.
Robinhood Agrees to $3.9 Million Settlement with California DOJ Over Crypto Withdrawal Restrictions
California Attorney General Rob Bonta said on Wednesday that an investigation found that Robinhood Crypto prevented customers from withdrawing their cryptocurrencies, forcing them to sell the assets back to Robinhood to exit the platform.
The company was also found to have misled customers by claiming it would connect to multiple marketplaces to offer competitive pricing, but this was not consistently the case.
“Robinhood misled customers and failed to meet its obligations under California’s consumer and investor protection laws. This settlement should send a strong message to all cryptocurrency companies that they must be held to the same standards as traditional financial institutions,” Bonta said.
As part of the deal, Robinhood agreed to allow customers to transfer crypto assets to external wallets and will make clear disclosures about the platform’s custody practices.
Additionally, Robinhood must notify customers of possible delays in processing transactions if there are concerns about a cryptocurrency’s network security.
Robinhood’s general counsel, Lucas Moskowitz, said in a statement that they were relieved by the solution and said: “We are pleased to put this matter behind us.
“The settlement fully addresses the Attorney General’s concerns regarding past practices, and we look forward to continuing to make crypto more accessible and affordable for everyone.”
Robinhood’s shares on the Nasdaq closed down 1.34% at $19.11 following the news.
*This is not investment advice.
