California Attorney General Rob Bonta announced a $3.9 million settlement with cryptocurrency trading platform Robinhood Crypto, LLC for failing to allow customers to withdraw their cryptocurrency from their Robinhood accounts from 2018 to 2022, and for failing to fully disclose aspects of its trading and order handling arrangements.
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The settlement resolves the investigation into Robinhood’s violation of the California Commodities Law (CCL) and includes a $3.9 million penalty and strong conduct requirements.
Robinhood operates a popular trading platform to buy and sell cryptocurrencies such as Bitcoin.
Cryptocurrency is a digital or virtual currency recorded on a blockchain, an electronic ledger of transactions that is updated through a process of multiple, independent computers agreeing that each transaction is legitimate.
In recent years, cryptocurrency has risen in popularity as a form of digital investment, and it is important to remember that the cryptocurrency market is highly volatile and there is no government guarantee or insurance for crypto assets.
The investigation into Robinhood resulted from consumer complaints of questionable behavior in the cryptocurrency industry.
The investigation by the California Department of Justice concluded that Robinhood sold commodities contracts in violation of the CCL by allowing customers, who hoped their investment would become more valuable shortly, to buy cryptocurrencies without actually delivering these assets to customers.
During that period, customers could not withdraw their cryptocurrency and were forced to sell it back to Robinhood to exit the trading platform.
Robinhood misled customers by advertising it would connect to multiple trading venues, to ensure customers receive the most competitive prices between the venues, which was not always true. Robinhood also represented to its customers that Robinhood itself held all its customers’ cryptocurrencies purchased through Robinhood’s platform.
Despite these assurances, Robinhood did not tell customers that there were instances in which it arranged for trading venues to hold customer assets for extended periods. ■
Predominant upper-level ridging stretching from the Southwest to the southern High Plains will allow for another day of record-breaking heat across parts of Nevada and Arizona today.