Robinhood Crypto Settles $3.9 Million for Failing to Let Customers Withdraw Cryptocurrency

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Robinhood Markets’ cryptocurrency platform, Robinhood Crypto, has agreed to pay a $3.9 million settlement to resolve claims that it failed to allow customers to withdraw their cryptocurrency holdings from 2018 to 2022. This settlement follows an investigation led by California Attorney General Rob Bonta. The case marks the first public legal action by Bonta’s office against a cryptocurrency company.

The claims center around Robinhood’s failure to deliver cryptocurrencies purchased by customers, preventing them from withdrawing their assets and effectively forcing them to sell their holdings in order to exit the platform. These actions were found to be in violation of California state law, according to Bonta.

Additionally, the Attorney General’s office stated that Robinhood misled its users about where their crypto assets were being stored and falsely advertised that it would connect customers to multiple trading venues to ensure competitive pricing for their transactions.

Though Robinhood Crypto did not admit or deny the allegations, the settlement requires the platform to allow customers to withdraw their cryptocurrency assets into personal wallets, ensuring greater transparency in how it handles trading orders and asset management moving forward.

Lucas Moskowitz, Robinhood’s general counsel, expressed satisfaction with the resolution, noting that the company looks forward to improving the accessibility and affordability of cryptocurrency for all users.

Attorney General Bonta issued a statement emphasizing the importance of following consumer and investor protection laws, stating that all companies, whether operating in traditional industries or emerging digital markets like cryptocurrency, must comply with California’s regulatory standards.

This legal resolution is seen as an important precedent in ensuring that cryptocurrency platforms remain accountable to their users and adhere to state laws designed to protect consumers.

Robinhood’s stock showed little impact from the news, with shares seeing a minor increase of 12 cents, reaching $19.23 in after-hours trading.