Robinhood’s Former Ban on Crypto Withdrawals Draws $3.9M Settlement in California

Robinhood’s former ban on crypto withdrawals has resulted in a settlement of $3.9 million in California. The popular trading app’s crypto-trading subsidiary used to prevent customers from withdrawing the tokens they purchased. Although this policy was abandoned in 2022, the state of California has imposed the settlement as a consequence of Robinhood’s past practices. The California Department of Justice investigated Robinhood’s crypto business from 2018 to 2022 and determined that the company violated California commodities law by allowing customers to buy cryptocurrencies but not allowing them to personally possess the assets. As part of the settlement, Robinhood is required to allow its customers to withdraw their cryptocurrencies from the app and update disclosures regarding its custody practices. This settlement resolves the inquiry from the California Attorney General, but Robinhood Crypto still faces scrutiny from the U.S. Securities and Exchange Commission over alleged violations of federal securities laws.