(Reuters) -Florida Attorney General James Uthmeier on Thursday launched an investigation into Robinhood Crypto, alleging that the platform may have misled customers by promoting itself as the least expensive way to buy cryptocurrencies.
The AG’s office said in a statement that it issued a subpoena to the unit of Robinhood Markets to obtain internal documents as part of the probe into possible violations of Florida’s Deceptive and Unfair Trade Practices Act.
“When consumers buy and sell crypto assets, they deserve transparency in their transactions,” Uthmeier said. “Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive,” he added.
The platform lets users buy and sell stocks and cryptocurrencies without charging direct commissions. Instead, the company makes money by routing client orders to third-party firms, which pay Robinhood under a practice known as payment for order flow (PFOF), the AG’s statement said.
Robinhood Markets General Counsel Lucas Moskowitz said the company discloses “pricing information to customers during the lifecycle of a trade that clearly outlines the spread or the fees associated with the transaction and the revenue Robinhood receives. We are proud to be a place where customers can trade crypto at the lowest cost on average.”
Robinhood Crypto has until July 31 to respond to the subpoena.
(Reporting by Prakhar Srivastava in Bengaluru; Editing by Shailesh Kuber)
