Robinhood has settled the Department of Justice (DoJ)’s first public action against a crypto firm. On Sep. 4, Robinhood Crypto, the digital asset division of the popular retail trading platform, agreed to a $3.9 million settlement with the DoJ. The action resulted from Robinhood Crypto allegedly preventing customers from withdrawing digital assets from the platform between 2018 and 2022. According to the California Department of Justice, Robinhood violated the California Commodities Law (CCL) by allowing customers to buy cryptocurrencies without delivering the assets. Customers were forced to sell cryptocurrencies back to Robinhood to exit the platform and could not withdraw the funds to digital wallets. Robinhood also faced charges for misleading advertising, The DoJ found that the platform claimed to provide the best available prices for digital assets through partnerships with third-party trading venues — a promise it did not always fulfill. Robinhood also failed to disclose that third-party trading venues sometimes held customers’ crypto assets for extended periods, the department said. "California has strong and enduring consumer protection laws that protect Californians against misrepresentation, including by cryptocurrency companies," said Attorney General Rob Bonta. “Whether you're a brick-and-mortar store or a cryptocurrency company, you must adhere to California's consumer and investor protection laws.” As part of the settlement, Robinhood agreed to allow customers to withdraw cryptocurrency to their personal wallets. The company must also ensure that representations made to customers regarding its trading and order-handling practices match its actual practices. The department added that Robinhood must "disclose to our office any incident that results in delayed settlement for longer than one week." Robinhood runs afoul of regulators This is not the first time Robinhood has faced backlash from regulators. In August 2022, the New York Department of Financial Services fined Robinhood $30 million for failing to comply with cybersecurity and anti-money laundering requirements. In December 2022, following the collapse of FTX, the Securities and Exchange Commission (SEC) issued a subpoena to Robinhood, launching an investigation into its crypto listings, custody services, and platform operations. In May 2024, the SEC sent Robinhood's crypto division a Wells Notice, indicating potential enforcement action over allegedly unregistered securities. Robinhood contests these claims, asserting they have made efforts to comply with SEC rules. Robinhood continues to expand its cryptocurrency trading operations. In June, the company announced plans to acquire the crypto exchange Bitstamp. Robinhood's second-quarter results for 2024 showed growth, with total net revenues increasing 40% year-over-year to $682 million. Crypto transaction revenues rose by 161% to $81 million.