Florida Investigates Robinhood Crypto Over Alleged Deceptive Pricing

Florida Attorney General James Uthmeier has initiated an investigation into Robinhood Crypto, alleging that the platform may have misled customers by promoting itself as the most cost-effective way to purchase digital assets. The attorney general’s office issued a subpoena to Robinhood’s crypto unit, requesting internal documents, marketing materials, and pricing data. The investigation aims to determine whether the company violated Florida’s Deceptive and Unfair Trade Practices Act.

“When consumers buy and sell crypto assets, they deserve transparency in their transactions,” Uthmeier stated. “Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive.”

Robinhood’s business model allows users to trade cryptocurrencies and stocks without charging direct commissions. The company generates revenue through a process called payment for order flow (PFOF), where trades are routed to third-party market makers who pay Robinhood for the opportunity to execute those trades. Critics argue that PFOF can obscure true costs for customers, potentially resulting in worse prices. Although legal and disclosed in filings, this practice has drawn regulatory scrutiny, especially in volatile markets.

The attorney general’s office accused Robinhood of “falsely promoting” its platform as the “least expensive way to purchase crypto.” The subpoena, which demands a response by July 31, seeks to determine if PFOF compromises transparency or results in hidden fees for users. In response, Robinhood’s General Counsel Lucas Moskowitz stated that the company clearly discloses pricing during every trade and shows users any spread or fees applied. “We are proud to be a place where customers can trade crypto at the lowest cost on average,” he said.

Regulatory filings indicate that PFOF made up roughly 15%-20% of Robinhood’s revenue in 2023. While the company has defended the model as a way to keep trading accessible, regulators and consumer advocates remain wary of the potential for behind-the-scenes costs. This investigation highlights the ongoing scrutiny of Robinhood’s business practices and the broader debate over transparency in the cryptocurrency market.