Robinhood Markets Inc. (HOOD) has reached a $3.9 million settlement with California’s Department of Justice regarding its previous ban on Bitcoin (BTC/USD) cryptocurrency withdrawals. The settlement stems from an investigation into Robinhood’s past policy, which prohibited customers from withdrawing their purchased cryptocurrencies, a practice that the California Department of Justice deemed a violation of state commodities law. While this 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 deemed a violation of state commodities law. The settlement requires Robinhood to continue allowing 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.”
This settlement arrives at a time when Robinhood is actively seeking to enhance its cryptocurrency offerings. Jason Warnick, CFO of Robinhood, recently expressed optimism about the company’s future, contingent on improved regulatory clarity for cryptocurrencies in the U.S. He believes clearer regulations would allow Robinhood to innovate more rapidly and offer more coins. Similarly, Vlad Tenev, CEO of Robinhood, discussed the company’s ambitious plans for cryptocurrency integration in a recent podcast appearance, emphasizing that Robinhood is building for a future where crypto is a fundamental part of the financial ecosystem.
The settlement comes amidst heightened scrutiny from the U.S. Securities and Exchange Commission (SEC). In May, the SEC indicated plans to file suit against Robinhood over alleged federal securities law violations. Despite these challenges, analysts have become more positive on Robinhood’s stock following the company’s strong second-quarter financial results. They view it as an attractive entry point for investors and forecast continued acceleration in the company’s growth.
Robinhood’s stock closed at $19.11 on Wednesday, down 1.34% for the day. However, the stock edged up 0.16% in after-hours trading. Year to date, Robinhood’s stock has surged by 54.49%, according to data from Benzinga Pro.
