{"id":13921,"date":"2025-07-11T06:41:37","date_gmt":"2025-07-11T04:41:37","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=13921"},"modified":"2025-07-11T06:41:37","modified_gmt":"2025-07-11T04:41:37","slug":"florida-investigation-targets-robinhood-over-claims-of-misleading-crypto-advertising","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/07\/11\/florida-investigation-targets-robinhood-over-claims-of-misleading-crypto-advertising\/","title":{"rendered":"Florida Investigation Targets Robinhood Over Claims of Misleading Crypto Advertising"},"content":{"rendered":"

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Florida\u2019s chief prosecutor has initiated an inquiry into trading platform Robinhood, accusing it of misleadingly advertising its crypto services as the most affordable on the marketplace.<\/p>\n

However, Lucas Moskowitz, Robinhood\u2019s chief legal officer, informed Cointelegraph in a statement that the platform is open about its fees, and users trade crypto at the lowest average cost.<\/p>\n

In a declaration on Thursday, Florida Attorney General James Uthmeier charged<\/a> Robinhood with violating Florida\u2019s Deceptive and Unfair Practices Act and issued a subpoena requesting various documents from the platform.<\/p>\n

Source: <\/em>Attorney General James Uthmeier<\/em><\/a><\/figcaption><\/figure>\n

\u201cCrypto is an essential part of Florida\u2019s economic future,\u201d and when \u201cconsumers engage in buying and selling crypto assets, they deserve clarity in their transactions,\u201d stated Uthmeier.<\/p>\n

\u201cRobinhood has long insisted it offers the best deal, but we believe those claims were misleading.\u201d<\/p><\/blockquote>\n

On its site, Robinhood asserts that traders can purchase and sell crypto<\/a> at the lowest average costs in the US.<\/p>\n

Robinhood asserts it offers the lowest cost on average for trading crypto in the US. Source: Robinhood<\/em><\/figcaption><\/figure>\n

Attorney general claims payment for order flow is the culprit<\/h2>\n

Robinhood earns revenue through payment for order flow<\/a> (PFOF), which Florida\u2019s attorney general contends makes the platform pricier because \u201cthird parties that compensate Robinhood for order flow might need to impose less favorable prices\u201d to stay profitable.<\/p>\n

Brokerage firms utilizing PFOF<\/a> receive a fee for directing orders and executing trades to a specific market maker or exchange, generally in fractions of a penny per share.<\/p>\n

PFOF is a prevalent practice in both stock and crypto trading. Source: <\/em>Cointelegraph <\/em><\/a><\/figcaption><\/figure>\n

In a December 2023 CNBC interview, Robinhood CEO Vlad Tenev defended<\/a> the practice amidst worries that it created a conflict of interest where brokers weren\u2019t consistently acting in clients\u2019 best interests.<\/p>\n

Robinhood accepted<\/a> to pay a $65 million penalty in December 2020, without admitting guilt, to resolve allegations from the SEC claiming, among other issues, that Robinhood deceptively stated its customers\u2019 orders were executed at prices lower than other brokers.<\/p>\n

Robinhood contends its operations are transparent<\/h2>\n

Robinhood General Counsel Lucas Moskowitz told Cointelegraph that the \u201cdisclosures are top-tier.\u201d<\/p>\n

\u201cWe provide pricing information to customers throughout the trade lifecycle that distinctly outlines the spread or the fees linked with the transaction and the revenue Robinhood receives,\u201d he remarked.<\/p>\n

\u201cWe take pride in being a platform where customers can trade crypto at the lowest average cost,\u201d Moskowitz emphasized.<\/p>\n

Robinhood has until the end of July to address the subpoena.<\/p>\n

Related: <\/strong><\/em>Private firms are eager to join Robinhood\u2019s tokenized equity platform: CEO<\/strong><\/em><\/a><\/p>\n

Stock rises at the end of trading<\/h2>\n

Robinhood investors seemingly dismissed the report regarding Florida\u2019s investigation, as the stock closed<\/a> Thursday\u2019s trading session up 4.4% to $98.70 coinciding with a crypto market surge.<\/p>\n

It is now merely a stone\u2019s throw from its all-time peak of $100.88.<\/p>\n

However, in after-hours trading, the stock fell slightly to $97.23, reflecting a decrease of 1.49%.<\/p>\n

Traders don\u2019t seem overly worried about Florida\u2019s investigation into Robinhood\u2019s practices. Source: <\/em>Google Finance <\/em><\/a><\/figcaption><\/figure>\n

In the past month, its shares have experienced a 30% climb, which has been linked to its strategic adoption<\/a> of blockchain technology and tokenization.<\/p>\n

Magazine: <\/strong><\/em>Growing numbers of users are taking LSD with ChatGPT: AI Eye<\/strong><\/em><\/a><\/p>\n