FLORIDA – Florida Attorney General James Uthmeier said Thursday that his office has submitted a subpoena to “uncover internal documents” belonging to Robinhood Crypto, LLC, after alleging that the company misled its customers by promoting itself as the “least expensive” way to purchase cryptocurrency.
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Uthmeier claims that there is evidence supporting the notion that buying and selling cryptocurrency on Robinhood’s platforms is more expensive than trading on other exchanges, despite the company’s promises that using their services gives customers access to “the most crypto for your money.”
“Robinhood induces customers to its platform by claiming to offer the ‘lowest cost on average’ to trade cryptocurrency and promising to deliver customers ‘the most crypto for your money,’” the attorney general writes. “However, there is evidence that trading on Robinhood is actually more expensive than trading on competing platforms.”
Robinhood, a stock trading platform that, according to the company, had nearly 26 million funded customers by the end of January. The exchange, instead of charging a commission, earns its revenue by working with third-party firms that take the opposite side of a trade posted by one of Robinhood’s users, something known as a payment for order flow, or PFOF.
Uthmeier believes Robinhood’s reliance on PFOF is the main reason why its messaging is misleading, saying that the third parties that Robinhood works with have the ability to “charge less favorable prices to the Robinhood customers they trade with to be profitable.”
For that reason, the attorney general says he has requested copies of documents to ensure that Robinhood’s business practices are in accordance with Florida law.
The full list of requested documents can be found here.
Robinhood Crypto, according to the attorney general, must respond to the subpoena by July 31.
In a statement sent to News4JAX, Robinhood said the following:
Our disclosures are best-in-class — We disclose pricing information to customers during the lifecycle of a trade that clearly outlines the spread or the fees associated with the transaction and the revenue Robinhood receives.
We are proud to be a place where customers can trade crypto at the lowest cost on average.
Lucas Moskowitz, General Counsel, Robinhood Markets, Inc.
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