Users encountered a single, common issue with Robinhood between 2018 and 2022. That was a crypto withdrawal. They could not withdraw their holdings despite Robinhood’s commitment to connecting to multiple trading venues for the most competitive prices. The matter reached the California Department of Justice, where authorities took notice and began an investigation into it. The dust has settled, and the exchange platform has agreed to make settlements worth $3.9 million in penalty over its past practice.
It was indeed a significant issue when users had the freedom to choose how to handle cryptocurrencies on the platform. If they desired to exit the platform, they could sell it back to Robinhood, as there was no imminent withdrawal. That’s brutal, one might assume, as selling often meant incurring losses while holding those tokens, and merely changing the platform meant aiming not just for profits but also for overall improved service.
Robinhood will now allow customers to withdraw their tokens, with settlement coming as early as the first half of 2025. Interested customers can execute the order to have their tokens transferred to their wallets, later switching to a different platform altogether. Or, they can choose to stay with Robinhood based on how it performs in the coming days. It is likely that it will attempt to make at least some changes to its practices in order to increase platform retention. If not, then there is a possibility of seeing another crypto exchange shut its door, which could end up having a ripple effect across the crypto market.
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This assumption originates from the collapse of FTX, which led to a prolonged decline in the value of digital tokens. Another example is Mt. Gox, which closed its doors following one of the biggest hacks.
In a statement, the California DOJ said that Robinhood misled its customers through advertisements where details shared were not entirely true. Authorities added that this investigation sends a strong signal across the region that no matter the kind of business someone is running, they must not afford to take customer and investor protection laws for granted.
Robinhood is now looking to put this behind them, further stating that they will continue working to make cryptocurrencies more accessible and affordable.
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The development has affected Robinhood in two ways. One, its NASDAQ shares closed at $19.11 on Wednesday, which is a decline of 1.34%. Two, it raises concerns about Bitstamp’s planned acquisition, with many speculating on whether the acquisition will go through and whether it will be a profitable venture in the long run. Robinhood’s revenue figures are good, according to the most recent report. Its transaction-based revenues were up by 161% on a Y-Y basis, expanding to $81 million. During the same second quarter, transaction revenues from equities for the platform doubled.
