Robinhood Reaches $3.9M Settlement With California Over Blocking Cryptocurrency Withdrawals

Robinhood Markets Inc. HOOD has agreed to a $3.9 million settlement with California’s Department of Justice over its past ban on Bitcoin BTC/USD cryptocurrency withdrawals.

What Happened: Robinhood’s previous policy, which restricted customers from withdrawing their purchased cryptocurrencies, has resulted in a $3.9 million settlement with California’s Department of Justice. Although the policy was terminated in 2022, the investigation covered practices from 2018 to 2022.

The California Department of Justice classified cryptocurrencies as commodities, and Robinhood’s restriction on personal custody of these assets was found to be in violation of state commodities law. As part of the settlement, Robinhood must continue to allow crypto withdrawals and update its disclosures regarding custody practices.

Lucas Moskowitz, general counsel for Robinhood Markets, stated in an emailed statement to CoinDesk, “The settlement fully resolves the Attorney General’s concerns related to historical practices, and we look forward to continuing to make crypto more accessible and affordable to everyone.”

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Robinhood also faces scrutiny from the U.S. Securities and Exchange Commission, which in May indicated plans to file suit over alleged federal securities law violations.

Why It Matters: Robinhood’s settlement comes at a time when the company is actively seeking to enhance its cryptocurrency offerings.

In early August, Jason Warnick, CFO of Robinhood, expressed optimism about the company’s future, contingent on improved regulatory clarity for cryptocurrencies in the U.S. He noted that clearer regulations would allow Robinhood to innovate more rapidly and offer more coins.

Additionally, Vlad Tenev, CEO of Robinhood, discussed the company’s ambitious plans for cryptocurrency integration in a podcast appearance in August. Tenev emphasized that Robinhood is building for a future where crypto is a fundamental part of the financial ecosystem.

Analysts have also turned more positive on Robinhood stock following the company’s strong second-quarter financial results. They see an attractive entry point for investors and forecast continued acceleration in the company’s growth.

Price Action: Robinhood’s stock closed at $19.11 on Wednesday, down 1.34% for the day. In after-hours trading, the stock edged up 0.16%. Year to date, Robinhood’s stock has surged by 54.49%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote