Florida's Attorney General, James Uthmeier, has launched an investigation into trading platform Robinhood, accusing the company of misleading promotion of its cryptocurrency services.
Allegations Against Robinhood
James Uthmeier has initiated an investigation against Robinhood, accusing the platform of violating Florida's Deceptive and Unfair Practices Act. He claims the platform falsely advertised its cryptocurrency services as the lowest-cost option in the U.S., which led to the issuance of a subpoena for document procurement.
Payment for Order Flow (PFOF) Practice
The investigation focuses on Robinhood's use of payment for order flow (PFOF), a practice where brokerage firms receive fees for directing orders to specific market makers or exchanges. Uthmeier claims this makes trading more expensive for customers, as market makers might offer worse prices to cover the fees they pay to Robinhood.
Robinhood's Response to the Investigation
Despite the ongoing probe, Robinhood's stock rose 4.40% to $98.70 on Thursday. Over the past month, the company's stock has surged 30%, driven by its embrace of blockchain technology and tokenization.
The initiated investigation may impact Robinhood's reputation and future business operations in the cryptocurrency sector, as customers demand transparency in their transactions.
