A court in Washington state has given final approval for a $9 million settlement involving crypto and stock brokerage platform Robinhood, stemming from allegations that the company sent unsolicited text messages to thousands of residents. The approval was confirmed in a motion filed Tuesday.
The lawsuit, initiated by plaintiffs Cooper Moore and Andrew Gillette, accused Robinhood of violating the Washington Commercial Electronic Mail Act and the Washington Consumer Protection Act through its referral program. The program allowed existing users to send promotional text messages to their contacts without the recipients’ consent, inviting them to join the platform. Both the referrer and the new user would receive a reward in the form of free stock upon sign-up.
Judge Barbara J. Rothstein of the U.S. Western District Court of Washington approved the settlement, stating that the terms were “reasonable and adequate in light of the complexity, expense, and duration of the litigation.”
The class-action lawsuit involved approximately 827,327 consumers who allegedly received these unsolicited text messages on a Washington area code telephone number. Over two years of litigation and extensive negotiations culminated in the settlement, which was reported by Law360.
The settlement fund, which will not revert back to Robinhood, is intended to benefit the settlement class members who filed claims. The court-approved notice plan reached 96% of the identified class members, with over 51,000 claims submitted. Each participating member is expected to receive a cash payment ranging between $111 and $170, depending on the number of validated claims.
In addition to the settlement fund, Moore and Gillette’s counsel were awarded $2.25 million in attorneys’ fees and $142,400 in litigation expenses. Both plaintiffs received $10,000 each in service payments for their roles in the case.
Robinhood, widely known for its commission-free trading platform, entered the cryptocurrency market in 2018, initially allowing users to trade Bitcoin and Ethereum. The platform later expanded its crypto offerings to include Dogecoin, Bitcoin Cash, and Litecoin. Robinhood has yet to comment on the settlement.
This settlement marks another legal challenge for Robinhood. In May, the U.S. Securities and Exchange Commission signaled its intent to take legal action against the firm, claiming that its crypto trading operations violated securities laws. Despite this, Robinhood has continued to expand its crypto ambitions, acquiring leading crypto exchange Bitstamp in June.
