A prominent trading platform, Robinhood, has agreed to a $3.9 million settlement with California’s Justice Department over accusations that it restricted crypto withdrawals between 2018 and 2022. The case marks the first action by the California Department of Justice against a cryptocurrency company.
Attorney General Rob Bonta claimed that Robinhood Crypto violated state laws by not allowing customers to fully control their crypto. Instead of delivering the purchased assets to them, customers had to sell their crypto to withdraw funds.
Bonta said that Robinhood also misled customers by saying it is holding funds while, in reality, it was sometimes stored with other trading venues. Additionally, Robinhood’s promise of offering competitive prices across multiple venues was not always true.
As part of the settlement, Robinhood will allow customers to withdraw their crypto to personal wallets and improve transparency about how it handles trades and custody.
Robinhood did not admit to any wrongdoing, but its general counsel, Lucas Moskowitz, said they are happy to resolve the issue and focus on making crypto more accessible. Robinhood shares (HOOD) fell 1.34% to $19.11 on Sept. 5 but gained slightly after hours.
This settlement adds to Robinhood’s efforts to clean up its image after the return of meme stock trading hero Keith Gill earlier this year, which helped boost its stock by 54.5% so far in 2024.
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