Robinhood’s cryptocurrency arm has agreed to a $3.9 million settlement following an investigation into its past practices, the California Department of Justice announced Wednesday. The settlement addresses concerns that from 2018 to 2022, Robinhood Crypto did not allow users to withdraw their cryptocurrency holdings. Effectively, it forced them to sell their assets back to the platform if they wished to exit.
The California DOJ said that Robinhood falsely promised to link to several trading venues to facilitate the best prices for customers, which was not accurate at times. Bonta further noted that this settlement reminds all businesses, including cryptocurrency firms, that they must abide by the California consumer and investor protection laws.
According to the terms of the settlement, Robinhood must enable its customers to withdraw funds based on cryptocurrencies and transfer the money to their wallets. As for users, the company has to notify them that it stores their crypto and may suspend payments in case of the existence of any security threats associated with the cryptocurrency’s network.
Robinhood CEO Tenev Emphasizes Commitment to Crypto Solutions After Settlement
Vlad Tenev, the CEO of Robinhood app, said that the settlement meets the concerns raised by the Attorney General. He also pointed out the need and willingness of the company to provide deeper and cheaper cryptocurrency solutions.
On Wednesday, the price of Robinhood shares in Nasdaq was on declined by 1.34% to $19.11. However, Robinhood continues to center its strategy on cryptocurrency trading. In particular, in June of this year, the company declared its intention to acquire a crypto exchange called Bitstamp, and this purchase is to be completed in 2025.
Moreover, another innovative service that Robinhood provides is that of cryptocurrency, and this line of business’s revenue in Q2 of this year was $81 million, which was 161% higher compared to the same period last year. It also outstripped the company’s revenue from equities transactions as a source of funding and investment opportunities.
