DOJ Penalizes Robinhood $3.9 Million For Past Crypto Withdrawal Restrictions
September 05 2024 - 10:08AM
NEWSBTC
Crypto trading platform Robinhood has reached a $3.9 million
settlement with the California Department of Justice (DOJ),
following an investigation into its alleged failure to allow
customers to withdraw their cryptocurrency from 2018 to 2022.
The investigation was prompted by numerous consumer complaints
regarding Robinhood’s practices, particularly its handling of
cryptocurrency withdrawals and trading. Alleged Violations
And Settlement Revealed According to the DOJ, Robinhood violated
the California Commodities Law (CCL) by enabling customers to
purchase cryptocurrencies without delivering these assets to them,
effectively selling commodities contracts without adhering to legal
requirements. Related Reading: Crypto Analyst Says The
Bitcoin ‘Summer Chop’ Is Nearing Its End, Here’s Why During the
specified period, customers could not withdraw their
cryptocurrencies and were forced to sell their holdings back to
Robinhood to exit the platform. California Attorney General Rob
Bonta stated: This settlement should send a strong message: Whether
you’re a brick-and-mortar store or a cryptocurrency company, you
must adhere to California’s consumer and investor protection laws.
The investigation alleged that Robinhood misled customers about its
trading practices. The DOJ claims that the platform promoted itself
as connecting users to multiple trading venues to ensure
competitive pricing, but the DOJ found that this was not
consistently accurate. Additionally, Robinhood claimed that
it held all customer-owned cryptocurrencies, failing to disclose
instances where third-party trading venues held these assets for
extended periods. Robinhood Measures Post-Settlement As part
of the settlement, Robinhood has agreed to several measures aimed
at improving transparency and customer trust. Customers will now be
permitted to withdraw their cryptocurrency assets to their own
wallets. Additionally, Robinhood must ensure that its written
communications accurately reflect its actual trading and order
handling practices. The company will also provide clear information
regarding its custody of cryptocurrencies. Related Reading: XRP
Rides High As Major Japanese Exchange Adds Support—Details Lastly,
Robinhood is required to report any incidents that result in
settlement delays exceeding one week to the California Department
of Justice. Featured image from DALL-E, chart from
TradingView.com
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