Robinhood Crypto LLC, a subsidiary of the popular trading app Robinhood, has been fined $3.9 million by the state of California for previous practices that prevented customers from withdrawing the cryptocurrency they purchased. Although the company abandoned this policy in 2022, its past actions were scrutinized by the California Department of Justice, which settled the investigation on Wednesday.
The investigation focused on Robinhood’s handling of cryptocurrency transactions from 2018 to 2022. Notably, California authorities classified the cryptocurrencies traded on the platform as commodities. By allowing customers to buy cryptocurrencies but barring them from transferring the assets to personal wallets, Robinhood violated state commodities law, according to a press release from the California Department of Justice.
As part of the settlement, Robinhood must maintain its current policy of allowing users to withdraw their crypto holdings and improve transparency about how it manages customer assets.
The company had previously acknowledged receiving subpoenas from the California Attorney General regarding its trading platform, operations, and the custody of customer assets. Robinhood, however, confirmed that this settlement concludes the inquiry.
“We are pleased to put this matter behind us,” said Lucas Moskowitz, Robinhood Markets’ general counsel, in a statement. “The settlement fully addresses the Attorney General’s concerns related to our historical practices, and we look forward to continuing to make crypto more accessible and affordable.”
Despite resolving the California investigation, Robinhood Crypto remains under scrutiny by the U.S. Securities and Exchange Commission (SEC). In May, the SEC informed the company that it was preparing to file a lawsuit over alleged violations of federal securities laws.
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