American investment firm Robinhood has settled a California crypto investigation while agreeing to pay a $3.9 million fine. Indeed, the firm’s crypto division has reached a settlement with the state Department of Justice for its restrictions on customer crypto withdrawals from 2018 to 2022.
California DOJ Attorney General Rob Bonta released a statement highlighting the settlement. Moreover, it notes that the development is the “first public action” from the DOJ against a cryptocurrency firm. It is yet another legal proceeding taken against the crypto sector this year.
Also Read: Robinhood: 161% Crypto Revenue Surge, $81M in Q2
Robinhood and California DOJ Reach $3.9M Settlement
The digital asset industry has seen increased legal action from the United States in recent years. Driven by the US Securities and Exchange Commission (SEC), it has seen some of the biggest firms face years-long court battles as the entire industry seeks out regulatory clarity.
Thursday, one crucial investigation was ended with a settlement. Indeed, Robinhood Crypto settled with the California DOJ amid an ongoing investigation, agreeing to pay a $3.9 million penalty. The investigation looked at “questionable behavior,” from Robinhood based on customer complaints.
Specifically, the DOJ established that users were unable to withdraw crypto for a number of years. Those customers were forced to sell those assets back to Robinhood if they sought to leave the platform.
Also Read: Will Robinhood’s Bitstamp Acquisition Help With SEC Hurdles?
“While cryptocurrency is fairly new, California has strong and enudring consumer protection laws,” Attorney General Bonta said in a press release. “Our investigations and settlement with Robinhod should send a strong message: Whether you’re a brick and mortar store or a cryptocurrency company, you must adhere to California’s consumer and investor protection laws.”
Ultimately, the DOJ said Robinhood crypto “misled customers” through advertising. However, the swift settlement is a good sign. It shows that the platform has acknowledged its wrongdoing, and paid the price. It should be another good step toward increased clarity and adherence for these firms.