Florida Attorney General James Uthmeier launched an investigation against Robinhood after allegations were made that it falsely promoted its crypto platform to be the least expensive method of purchasing digital assets.
Uthmeier notes that Robinhood earns revenue by routing customers’ trades to third-party market makers in a payment-for-order-flow (PFOF) system.
State Attorney General says Robinhood lures in customers with its claim to have the “lowest average cost” for trading crypto. Uthmeier, on the other hand, argues that Robinhood is more expensive because of its PFOF trading structure than competitors that provide all-in costs.
The consumer deserves transparency when they buy or sell cryptocurrency assets. Robinhood claims to offer the best deal, but these representations are deceptive .”
According to the Attorney General, third-party marketmakers that Robinhood pays for orders flow often have to lower prices in order to make a profit.
Uthmeier sent a subpoena to Robinhood, asking for documents relating to organization, employees, advertising, fees and disclosures to customers, PFOF, information on PFOF, information about Florida users, as well as documents pertaining to data sales.
According to the Attorney General, Robinhood’s crypto division must respond to the court order by the end the month.
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This article Florida Attorney General Probes Retail Trading Giant, Robinhood For Allegedly Claiming To Be The Least Expensive Blockchain Platform first appeared on The ICD.
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