Robinhood Crypto Under Fire: Alleged ’False’ Low-Fee Promises Spark Regulatory Probe

Robinhood's crypto division faces heat as regulators scrutinize its fee structure—turns out 'free trading' might come with hidden costs.

Another fintech darling stumbles? The SEC and state AGs are digging into whether the platform misled users with too-good-to-be-true pricing claims.

When the 'disruptor' plays by Wall Street's old playbook: zero-commission trades could mean you're paying in other ways. Stay tuned as this crypto drama unfolds.

Florida Launches Investigation into Robinhood Crypto

Robinhood crypto LLC is facing a state-level investigation in Florida over how it promotes its trading costs. The state’s Attorney General, James Uthmeier, said the platform’s claim to offer “the least expensive way to purchase crypto” doesn’t appear to be backed by evidence.

“Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive,” Uthmeier said. 

The AG’s office has issued a subpoena for internal documents, including any records supporting the claim that Robinhood offers the lowest trading costs on average.

Marketing vs. Actual Costs

Robinhood operates as a commission-free platform but earns from routing trades to third-party firms through payment for order flow. Florida officials say this practice may mean users pay more than expected, even if they aren’t charged upfront fees.

The state’s probe will look at whether customers are given a full picture of what they pay. Uthmeier added, 

“When consumers buy and sell crypto assets, they deserve transparency in their transactions.”

SEC Closes Separate Probe into Robinhood Crypto

While Robinhood now faces scrutiny in Florida, it recently cleared a federal regulatory hurdle. The U.S. Securities and Exchange Commission ended its long-standing investigation into the company’s crypto unit without taking action. That decision removes a major obstacle for Robinhood as it pushes deeper into digital assets.

The company also sent a proposal to the SEC last month, calling for updated rules around tokenized real-world assets. It asked regulators to treat blockchain-based versions of assets like real estate or stocks the same as their traditional forms, rather than as derivatives.

Despite the state investigation, Robinhood is moving ahead with its global expansion. As CryptoPotato reported, the company has completed a $200 million acquisition of Bitstamp, gaining access to customers across Europe, the UK, and Asia. The MOVE marks a shift toward serving larger institutions alongside retail users.

Meanwhile, Robinhood shares ended Thursday at $98.70, up 4.4% for the day, according to Yahoo Finance.