Florida Lawyer Common James Uthmeier has launched an investigation into Robinhood over allegations that the retail buying and selling big falsely promotes its crypto platform because the least costly strategy to buy digital property.
Uthmeier notes that Robinhood earns income by routing prospects’ trades to third-party market makers in a payment-for-order-flow (PFOF) system.
The state legal professional basic says Robinhood attracts prospects 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 property, they deserve transparency of their transactions. Robinhood has lengthy claimed to be the most effective cut price, however we imagine these representations had been misleading.”
The legal professional basic says third-party market makers that pay Robinhood for order circulate generally need to 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 information, and data concerning Florida customers particularly.
Robinhood’s crypto division is required to reply to the subpoena by the tip of the month, in accordance with the legal professional basic.
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