Florida AG Investigates Robinhood Over Crypto Pricing Claims

Florida Lawyer Common James Uthmeier has launched an investigation into Robinhood Crypto, alleging the favored buying and selling platform has misled clients by falsely selling itself because the least costly approach to buy digital belongings.

“Robinhood has lengthy claimed to be one of the best discount, however we consider these representations had been misleading,” Lawyer Common James Uthmeier stated in a statement Wednesday. 

The workplace has issued a subpoena for inside paperwork, alleging that Robinhood Crypto is violating Florida’s Misleading and Unfair Commerce Practices Act by making doubtlessly false value representations to customers.

“Crypto is an important part of Florida’s monetary future, and President Trump’s efforts to advance the crypto market will make America stronger and wealthier,” Uthmeier stated.

The probe comes at a time when crypto regulation is present process a big shift below the Trump administration, with the SEC just lately ending investigations into quite a few crypto firms, including Robinhood itself, simply months in the past. 

Nonetheless, the state-level investigation focuses particularly on client safety reasonably than federal securities violations.

The investigation targets Robinhood’s enterprise mannequin, which generates income via cost for order stream reasonably than charging direct commissions. 

Underneath this construction, Robinhood routes buyer trades to third-party corporations that pay the platform for the chance to take the alternative facet of buyer trades.

The Florida probe marks a renewed deal with Robinhood’s controversial cost for order stream mannequin, the identical follow that drew a $65 million SEC high quality in 2020 for failing to reveal the way it may result in inferior commerce execution for patrons.

The AG’s workplace stated that whereas Robinhood markets itself as providing the “lowest value on common” for crypto buying and selling and guarantees to ship clients “probably the most crypto on your cash,” proof allegedly suggests buying and selling on the platform may very well be costlier than rivals as a result of its order stream construction.

The subpoena, which requires a response by July 31, seeks in depth documentation, together with organizational charts, advertising and marketing supplies, worker coaching paperwork, and detailed information of all Florida person trades in 2024. 

The request additionally seeks paperwork displaying how the platform determines pricing for transaction rebates, coaching supplies for personnel discussing crypto buying and selling prices with customers, and information associated to the sale or entry of customers’ cryptocurrency buying and selling knowledge.

“Ideally, any illustration made publicly by a enterprise have to be substantiated with credible proof,” Hargun Singh, Web3 lawyer and affiliate at Luthra and Luthra Regulation Workplaces India, instructed Decrypt.

“On this context, the subpoena issued to Robinhood Crypto seems to stem from a prima facie view that buying and selling on its platform could, in actual fact, be costlier than on competing platforms, straight contradicting its advertising and marketing claims of being the ‘lowest value’ choice.”

To defend in opposition to the allegations, Singh stated Robinhood would wish to “produce substantive proof supporting its claims concerning decrease pricing” and present transparency by disclosing particulars about its “pricing methodology” and the “influence of cost for order stream preparations on crypto commerce execution and pricing for customers.”

Robinhood is “unlikely to reach difficult the subpoena on jurisdictional grounds” since client safety legal guidelines typically have “extraterritorial applicability” when misleading promoting impacts residents inside a selected jurisdiction,” he stated.

Robinhood has been approached for remark.