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Robinhood Crypto LLC has agreed to pay $3.9 million to settle claims from the California Department of Justice, which accused the company of preventing customers from withdrawing cryptocurrency between 2018 and 2022. California Attorney General Rob Bonta announced on Sept. 4 that this was the state’s first public action against a crypto company.
Bonta alleged that Robinhood violated state commodities laws by allowing users to buy crypto without delivering the assets to them. Customers were reportedly forced to sell their crypto back to Robinhood to withdraw their funds. Additionally, Robinhood misled users by claiming it held customer assets when, in some cases, other trading platforms held the crypto. The company was also accused of falsely advertising that it connected to multiple trading venues for better pricing, which wasn’t always the case.
While Robinhood did not admit to any wrongdoing, the settlement, dated Aug. 31, requires the company to allow customers to withdraw their crypto to their own wallets. Robinhood must also clarify its policies on trading, order handling, and custody and ensure they are followed.
Bonta emphasized that this settlement sends a clear message: all businesses, including cryptocurrency companies, must comply with California’s consumer and investor protection laws. Robinhood’s general counsel, Lucas Moskowitz, stated that the company is pleased to resolve the matter and remains committed to making crypto more accessible and affordable.
This settlement marks a significant action in regulating cryptocurrency practices, ensuring that companies like Robinhood adhere to consumer protection standards.
