Yahya 
Robinhood Markets’ crypto division has agreed to a $3.9 million settlement with California’s Department of Justice over charges that it prohibited bitcoin withdrawals for users between 2018 and 2022. Declared on September 4 by California Attorney General Rob Bonta, the settlement is the first public enforcement action the Department of Justice of the state executes against a bitcoin company.
Attorney General Bonta accused Robinhood Crypto LLC of violating California’s commodities laws by preventing customers to withdraw their purchased crypto assets. Customers were therefore forced to sell their crypto assets back to Robinhood in order to get their money. The company also allegedly misled customers by claiming, in reality, that it possessed client assets when other trading platforms usually stored the assets.
Bonta also claimed that Robinhood deceived its trading activities by suggesting that it connected to many trading platforms to ensure competitive pricing for its customers, not always the case.
Robinhood promised many corrective actions but denied any culpability in line with the deal. The company now needs to let customers withdraw bitcoin to their own wallets and ensure transparency on its order processing, custody procedures, and trading practices.
“Whether you are a brick-and-mortar store or a bitcoin company, you must adhere to California’s consumer and investor protection laws, our investigation and settlement with Robinhood should send a strong message,” Bonta said.
Robinhood responded by pledging itself to make cryptocurrencies more freely accessible. “The settlement totally resolves the Attorney General’s concerns related to historical practices; we look forward to continue making crypto more accessible and affordable to everyone,” the company said.
Following the revelation, on Sept. 4 Robinhood’s (HOOD) shares closed down 1.34% at $19.11. Closing at $19.14, its after-hours trading increase was modest 0.16%. Driven by a revival in retail trading and the return of legendary meme stock trader Keith Gill earlier in the year, HOOD shares are up 54.5% this year despite the setback.
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