Robinhood Crypto is the subject of an investigation in Florida for having allegedly announced its platform as the cheapest means of buying the crypto.
In a press release on Thursday, the Florida Attorney General James Uthmeier said that his office had evidence to suggest that cryptographic traders really pay more, on average, when using Robinhood than when using competing platforms.
“Crypto is an essential element of the financial future of Florida and the President [Donald] Trump’s efforts to advance the cryptography market will make America stronger and rich. When consumers buy and sell cryptographic assets, they deserve transparency in their transactions, “said Uthmeier.” Robinhood has long claimed to be the best deal, but we believe that these representations were misleading. “”
At the heart of the allegation of uthmeier is the payment of Robinhood for the order flow (Pfof) Trade model. The PFOF allows Robinhood to offer commission -free exchanges by rather generating income by buying its client exchanges through market manufacturers in exchange for a reduction in profits. Critics of practice – that Robinhood also uses for the trading of shares – have complained that the PFOF presents an inherent conflict of interest, potentially encouraging the company to send customer transactions via the market manufacturer offering the most commission, not the best price for customers.
In 2020, Robinhood paid $ 65 million to settle an American securities and exchange commission (SECOND) Application measures alleging that the company has distorted the quality of its executions of customer trades. Robinhood did not admit or refused the conclusions of the dry. Under the former president Gary Gensler, the SEC planned to ban the PFOF, but ultimately did not. The PFOF is prohibited in the United Kingdom and will be prohibited in the European Union from next year.
Robinhood CEO Vlad Tenev defended the practice for a long time, telling CNBC in 2023 that the PFOF was “intrinsically there to stay”.
“Our disclosure is the best in class – we disclose information on prices to customers during the life cycle of a trade which clearly describes the spread or the costs associated with the transaction and income receives on average.
The assignment of uthmeier seeks a multitude of information from Robinhood, including the documentation of how the platform determines the prices of transaction discounts or PFOF practices with market manufacturers, documents containing comparative price analyzes from other crypto exchanges and documents relating to the sale or access of user trading data.
Robinhood has until the end of the month to respond to the assignment of uthmeier.
