Robinhood, a popular investment firm that also has a crypto department has agreed to pay $3.9 million in settlements for blocking its users from withdrawing their crypto assets between 2018 and 2022.
The agreement was reached with California’s justice department in what was recorded as the first public action against a crypto firm by the California Department of Justice.
California Attorney General Rob Bonta explained the case saying that Robinhood’s action was a clear violation of the state’s commodity laws.
- Robinhood allowed customers to buy Crypto and then this said customers could not withdraw the crypto assets they bought. They were forced to sell off their assets to Robinhood in order to recoup their money.
- Robinhood also lied to its customers that they were in full custody of their crypto assets while in some cases the crypto assets were held by other platforms.
Finally, Robinhood promised to link its platform to multiple trading venues in order to present its customers with competitive prices. It did not do this at the end of the day.
Robinhood did not deny these charges and reached a settlement with California’s Department of Justice on Aug 31.
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The settlement agreement between both parties reflected the state of California’s stance on commodities and consumer protection.
“Our investigation and settlement with Robinhood 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,” Bonta said.
“We are pleased to put this matter behind us,” Robinhood general counsel Lucas Moskowitz said
“The settlement fully resolves the Attorney General’s concerns related to historical practices, and we look forward to continuing to make crypto more accessible and affordable to everyone.” Lucas Moskowitz added.
The development slightly affected Robinhood’s stock price in the global stock market.
Robinhood (HOOD) shares closed down 1.34% to $19.11 on Sept. 4, only seeing a slight 0.16% rise to $19.14 at the end of after-hours trading, according to Google Finance.
However, Robinhood is up 54.5% so far this year stemming from the momentum it gained when Roaring Kitty a popular meme stock trader resurfaced on the trading scene after a three-year hiatus.
What to Know : Robinhood is a popular investment firm that offers its users the opportunity to invest in the stock market via its app. The investment firm pivoted into crypto to cater to the growing market of crypto enthusiasts. Robinhood supports trading cryptocurrency assets like meme coins and other altcoins.
