Robinhood Crypto LLC has agreed to pay $3.9 million to settle claims it failed to let customers withdraw cryptocurrency from their accounts between 2018 and 2022. The crypto arm of Robinhood Markets reached the settlement with California's Justice Department, which alleged Robinhood Crypto LLC violated the state's commodities laws by allowing customers to buy crypto without delivering those assets to them and forcing them to sell their crypto to Robinhood in order for their funds to leave the platform.
California Attorney General Rob Bonta stated that this was the first public action against a crypto company by the California Department of Justice. Bonta had accused Robinhood of misleading its users by claiming it held customer crypto when, in some cases, other trading venues held the assets. The trading platform was also accused of further misleading customers by advertising that it would connect to multiple trading venues for its users to get competitive prices, which wasn't always true.
As part of the settlement, Robinhood did not admit or deny wrongdoing. The agreement stipulated that, in addition to the monetary penalty, Robinhood must allow customers to withdraw their crypto to their own wallets and clarify its trading, order handling, and custody representations to users to ensure they're followed.
Source: https://cointelegraph.com/news/robinhood-multimillion-california-settlement-crypto-withdrawal-block
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