Robinhood Markets, Inc. has agreed to a $3.9 million settlement with the California Department of Justice concerning issues with cryptocurrency withdrawals. The settlement resolves claims that Robinhood’s cryptocurrency platform, HOOD, obstructed customers from withdrawing their crypto assets between 2018 and 2022.
California Attorney General Rob Bonta stated that Robinhood violated state law by failing to deliver the cryptocurrencies purchased by customers, effectively preventing them from withdrawing their assets. This issue forced customers to sell their crypto holdings to exit the platform. Bonta also accused Robinhood of misleading customers about the storage of their crypto assets and falsely advertising that it would provide access to multiple trading venues for competitive pricing.
As part of the settlement, Robinhood is required to enable customers to withdraw their crypto assets to personal wallets and adhere to its stated trading and order handling practices. Bonta emphasized that the settlement “should send a strong message: whether you’re a brick-and-mortar store or a cryptocurrency company, you must adhere to California’s consumer and investor protection laws.”
While Robinhood did not admit to or deny any wrongdoing, General Counsel Lucas Moskowitz expressed satisfaction with the resolution, stating, “We are pleased to put this matter behind us. The settlement fully resolves the Attorney General’s concerns related to historical practices, and we look forward to continuing to make crypto more accessible and affordable to everyone.”
In recent financial performance, Robinhood shares have risen by 16.5% over the past six months, outperforming the industry average growth of 10.3%. The company currently holds a Zacks Rank #2 (Buy).
Additional Financial Misconduct by Firms
In related financial news, the Commodity Futures Trading Commission (CFTC) has imposed a $5 million civil penalty on The Bank of New York Mellon Corporation (BNY Mellon) for failing to report millions of swap transactions to a registered swap data repository, in violation of a previous CFTC order. BNY Mellon also failed to adequately supervise its swap dealer business as mandated by the Commodity Exchange Act and CFTC regulations.
The CFTC’s order requires BNY Mellon to engage an independent compliance consultant to review and advise on its compliance program. The penalty follows repeated failures by BNY Mellon between 2018 and 2023 to correctly report at least five million swap transactions and oversee its swap dealer operations.
The CFTC has also sought non-disclosure agreements from JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) concerning their swaps and clearing businesses, along with employment and customer agreements related to these operations.
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