Robinhood’s Past Crypto Withdrawal Ban Cost $3.9 Million

Robinhood’s crypto trading subsidiary was not allowing customers to withdraw purchased tokens. Although Robinhood Crypto LLC abandoned the policy in 2022, the practice in the past led to the company receiving a $3.9 million fine from the state of California.

The California Department of Justice has concluded its investigation into what Robinhood’s top lawyer called the popular trading app’s “past practices” in crypto from 2018 to 2022.

The state’s investigation treated cryptocurrencies that investors can buy and sell through Robinhood as commodities. According to a press release from the California Department of Justice, the company violated California commodities law by allowing customers to purchase crypto but not to take personal custody of the assets.

Under the agreement, Robinhood will continue to allow customers to withdraw cryptocurrencies and will update disclosures regarding its custody practices.

Robinhood Crypto previously disclosed that in addition to the disclosure and surveillance of customer assets, it had received multiple subpoenas from the California Attorney General regarding the trading platform’s operations and token listings. A Robinhood spokesperson emphasized that with the resolution of the CA AG investigation, there are no ongoing investigations.

Following the resolution of the investigation, Robinhood Markets’ general counsel Lucas Moskowitz said: “We are pleased to put this matter behind us. The settlement fully resolves the attorneys general’s concerns regarding past practices. We look forward to continuing to make crypto more accessible and affordable for everyone.”