Florida Lawyer Common James Uthmeier has launched an investigation into Robinhood over allegations that the retail buying and selling large falsely promotes its crypto platform because the least costly option to buy digital belongings.
Uthmeier notes that Robinhood earns income by routing clients’ trades to third-party market makers in a payment-for-order-flow (PFOF) system.
The state legal professional normal says Robinhood attracts clients by claiming to supply the “lowest value on common” to commerce crypto. Uthmeier argues, nonetheless, that Robinhood’s PFOF construction truly makes it costlier than competing platforms that supply all-in buying and selling prices.
“When customers purchase and promote crypto belongings, they deserve transparency of their transactions. Robinhood has lengthy claimed to be the perfect cut price, however we consider these representations had been misleading.”
The legal professional normal says third-party market makers that pay Robinhood for order move typically must cost worse costs to be worthwhile.
Uthmeier issued a subpoena, asking Robinhood for organizational paperwork, worker info, promoting historical past, disclosures made to customers associated to charges, pricing paperwork, PFOF info, paperwork associated to the sale of buyer knowledge, and data relating to Florida customers particularly.
Robinhood’s crypto division is required to reply to the subpoena by the top of the month, based on the legal professional normal.
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