A cryptocurrency platform operated by Robinhood Markets has agreed to pay $3.9 million to settle a complaint from the California Department of Justice over its failure to allow customers to withdraw cryptocurrency from 2018 to 2022.
This settlement marks the first public enforcement action by Attorney General Rob Bonta’s office against a cryptocurrency company.
According to California Attorney General Rob Bonta, Robinhood violated California law by not delivering the cryptocurrencies purchased by customers, preventing them from withdrawing their assets and forcing them to sell their assets to exit the platform. Bonta also accused the company of misleading customers about cryptocurrency storage and making false claims about connecting customers with various trading venues to ensure the best prices.
In addition to the monetary penalty, the settlement requires Robinhood to enable customers to withdraw their cryptocurrency to their wallets and to clarify issues related to trading, order handling, and asset custody. Robinhood has neither admitted nor denied any wrongdoing but stated that they are pleased to resolve the matter and are committed to improving the transparency of their platform.
According to Google Finance, Robinhood’s stock fell by 1.34% to $19.11 on September 4 and only increased slightly by 0.16% to $19.14 at the close of after-hours trading, while the stock price has risen approximately 54.5% this year.
California Attorney General Rob Bonta emphasized that this settlement sends a clear message that all companies, whether traditional or cryptocurrency, must comply with California’s consumer and investor protection regulations.
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