Robinhood in $3.9 million settlement with California over crypto withdrawals

By Jonathan Stempel

(Reuters) -A cryptocurrency platform run by Robinhood (NASDAQ:) Markets will pay $3.9 million to settle claims it failed to let customers withdraw cryptocurrency from their accounts from 2018 to 2022, California Attorney General Rob Bonta said on Wednesday.

The civil settlement with Robinhood Crypto is the first public action by Bonta’s office against a cryptocurrency company.

Bonta said Robinhood violated California law by failing to deliver cryptocurrencies that its customers had bought, leaving customers unable to withdraw their assets and forcing them to sell the assets to exit the platform.

The attorney general said Robinhood also misled customers about where their crypto assets were held, and by advertising it would connect customers to multiple trading venues to ensure they got competitive prices.

Robinhood did not admit or deny wrongdoing. The settlement also requires the platform to let customers withdraw crypto assets to their own wallets, and honor its representations about its trading and order handling practices.

Lucas Moskowitz, Robinhood’s general counsel, in a statement said the Menlo Park, California-based company was pleased to settle, and looked forward to making cryptocurrency “more accessible and affordable to everyone.”

In a separate statement, Bonta said the settlement “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.”

Robinhood shares rose 12 cents to $19.23 in after-hours trading.