Robinhood Crypto, LLC has agreed to pay a $3.9 million settlement with the California Attorney General’s Office over allegations of consumer protection violations.
Violations of State Law
The agreement resolves a broader investigation into violations of the California Commodities Law (CCL). Attorney General Rob Bonta emphasized that the state’s robust consumer protection laws apply equally to emerging industries like cryptocurrency. Bonta stated, "Whether you're a brick-and-mortar store or a cryptocurrency company, you must adhere to California's consumer and investor protection laws."
DOJ Investigation Findings
Following consumer complaints, the California Department of Justice scrutinized Robinhood. The investigation revealed that Robinhood sold commodities contracts in violation of the CCL, allowing customers to purchase cryptocurrencies without actually transferring those assets to them. Instead, customers were forced to sell their cryptocurrency back to Robinhood if they wished to exit the platform.
Changes to Business Practices
The settlement requires Robinhood to pay a $3.9 million penalty and implement significant changes to its business operations. These changes include ensuring customers can withdraw their cryptocurrency assets and providing accurate information about its trading practices.
The settlement between Robinhood Crypto and the California Attorney General’s Office underscores the importance of adhering to consumer protection laws, even in rapidly evolving industries like cryptocurrency.
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