Robinhood Crypto Ban Leads Platform to $3.9 Million Fine

Key Points:

• California fined Robinhood Crypto $3.9 million for previously restricting users from withdrawing their purchased cryptocurrencies.
• The state’s investigation found that Robinhood Crypto ban on withdrawal violated California’s commodities laws.

California’s Department of Justice fined Robinhood’s cryptocurrency trading platform $3.9 million for prior practices that violated state commodities laws.

Read more: Robinhood Crypto Futures May Launch in the US. and Europe Soon to Boost Markets

California Charges Robinhood Crypto Ban on Withdrawal with Securities Law Violation

The penalty announced on Wednesday was based on Robinhood Crypto bans between 2018 and 2022, during which the platform barred customers from being able to withdraw the cryptocurrencies they bought.

California regulators’ investigation treated the cryptocurrencies that were traded on Robinhood as commodities. It found that Robinhood Crypto let customers buy a digital asset but never give them custody, which is against state laws.

“Our investigation and settlement with Robinhood 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,” said the Attorney General Rob Bonta.

Settlement Forces Robinhood to Rework Crypto Practices

Although Robinhood Crypto ban on withdrawal was terminated last year, it must now pay the piper for the sins of its past. As part of the settlement, the company must continue allowing customers to withdraw their cryptocurrencies and must revise its disclosures about asset custody.

Robinhood has also revealed that it received subpoenas from the California Attorney General, pertaining to its business operations, trading practices, and asset custody. The settlement will see the company, without admitting to any wrongdoing, go through an independent review by the SEC, reportedly investigating alleged violations of federal securities laws.

It is now upon Robinhood to live up to their words of transparency and let the customers be in custody of their crypto.