Florida Investigates Robinhood Over Crypto Pricing Claims
The Florida Attorney General has launched an investigation into Robinhood regarding its claims about offering the lowest-cost crypto trades in the U.S. State regulators allege that the platform may have misled users with this marketing message.
Attorney General James Uthmeier stated that Robinhood may have violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). He noted that the company’s claim contradicts its business model, which earned it a $4 million fine, and may operate against customers’ best interests.
Robinhood’s Revenue Model Under Fire
Robinhood earns a significant portion of its revenue through a controversial practice known as Payment for Order Flow (PFOF). In this model, brokers send customer orders to market makers in exchange for payment. These third-party firms may prioritize their own profit margins, which can affect trade execution quality and final pricing.
Uthmeier emphasized that this practice may result in higher customer fees, which directly contradicts Robinhood’s advertised “low-cost” status.
“Floridians deserve full transparency when trading crypto,” said Uthmeier. “Robinhood’s claims may not match reality for consumers.”
Robinhood Responds, Defends Transparency
Robinhood’s General Counsel Lucas Moskowitz defended the company’s pricing practices and transparency. He said:
“Robinhood has best-in-class disclosures, informing users of spreads and transaction fees when applicable. Throughout each trade, we show price information. We still believe that crypto can trade at the lowest average price for our customers.”
The state of Florida has issued a subpoena requesting internal documents, marketing materials, pricing models, and 2024 trade data related to Florida-based users. Robinhood is expected to respond by the end of July.
Robinhood’s Past Controversies Resurface
This isn’t the first time Robinhood has faced scrutiny. In 2020, the company paid a $65 million settlement to the U.S. Securities and Exchange Commission (SEC) over allegations that it misled customers about the quality of order executions—without admitting guilt.
PFOF remains a central debate in both stock and crypto markets, with critics arguing it creates a conflict of interest between brokers and their clients.
Market Reaction to the Probe and Stock Performance
Despite the probe, Robinhood’s stock has shown resilience. Shares of HOOD were up 4.4% on Thursday, trading at $98.70, driven by a strong crypto market. However, the stock dipped slightly in after-hours trading.
