Florida’s leading legal authority has launched an inquiry into the trading platform Robinhood, suggesting that it has been erroneously advertising its cryptocurrency offerings as the most affordable on the market.
Lucas Moskowitz, Robinhood’s chief legal officer, however, refuted these allegations in a statement to Cointelegraph, insisting that the platform is upfront about its charges, providing the cheapest average cryptocurrency trading services for its users.
James Uthmeier, Florida’s Attorney General, accused Robinhood of contravening the Florida Deceptive and Unfair Practices Act in a statement released on Thursday. He also issued a subpoena requiring various documents from the platform. He emphasized that “Crypto is a pivotal component of Florida’s financial future,” and consumers should be ensured transparency in their transactions.
Robinhood has always maintained its position as the most economical option, but Uthmeier contends these claims are misleading. Robinhood’s website asserts that its traders can buy and sell cryptocurrencies at the lowest average cost in the US.
The Attorney General points out that Robinhood’s revenue model, which is based on payment for order flow (PFOF), makes the platform more costly since third parties paying Robinhood for order flow may need to quote less favorable prices to maintain profitability.
Robinhood CEO Vlad Tenev defended the practice in a 2023 CNBC interview, despite concerns about potential conflicts of interest and brokers possibly not always acting in the best interest of clients.
In December 2020, Robinhood agreed to a $65 million fine, with no admission of guilt, to settle SEC allegations, including claims that Robinhood falsely stated its customers’ orders were executed at better prices than other brokers.
Speaking to Cointelegraph, Robinhood’s General Counsel Lucas Moskowitz claims that their “disclosures are best-in-class.” He added, “We are proud to be a place where customers can trade crypto at the lowest cost on average.”
Despite the news of Florida’s investigation, Robinhood investors seemed unaffected, with the stock closing Thursday’s trading session up by 4.4% at $98.70 during a crypto market rally, just short of its all-time high of $100.88.
