Florida Attorney General James Uthmeier has launched an investigation into Robinhood over allegations that the retail trading giant falsely promotes its crypto platform as the least expensive way to purchase digital assets.
Uthmeier notes that Robinhood earns revenue by routing customers’ trades to third-party market makers in a payment-for-order-flow (PFOF) system.
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The state attorney general says Robinhood attracts customers by claiming to offer the “lowest cost on average” to trade crypto. Uthmeier argues, however, that Robinhood’s PFOF structure actually makes it more expensive than competing platforms that offer all-in trading costs.
“When consumers buy and sell crypto assets, they deserve transparency in their transactions. Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive.”
The attorney general says third-party market makers that pay Robinhood for order flow sometimes have to charge worse prices to be profitable.
Uthmeier issued a subpoena, asking Robinhood for organizational documents, employee information, advertising history, disclosures made to users related to fees, pricing documents, PFOF information, documents related to the sale of customer data, and information regarding Florida users specifically.
Robinhood’s crypto division is required to respond to the subpoena by the end of the month, according to the attorney general.
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