Neobroker Robinhood is paying $4 million in compensation to crypto investors
Neobroker Robinhood is paying users around four million US dollars in compensation after the company prevented its customers from withdrawing cryptocurrencies for four years. Today, the company is publicly showing its reformation, but it was only in early August that it made negative headlines.
Neobroker Robinhood is paying $4 million in compensation to crypto investors
Neobroker Robinhood is paying users nearly four million US dollars in compensation after the company reached an agreement with plaintiffs in legal disputes.
The background to the lawsuit was that Robinhood refused to pay out crypto investors’ cryptocurrencies from 2018 to 2022. Instead, investors had to exchange their coins for fiat currencies in order to withdraw their money.
This approach contradicted Robinhood’s advertising, reports Reuters . Robinhood also deceived users with other misrepresentations. For example, the company claimed to always provide users with the best price by comparing and cooperating with various trading platforms.
According to the court’s findings, this information was never true. The custody of the coins was also publicly misrepresented in order to achieve greater popularity among users.
Robinhood often did not store the cryptocurrencies itself, but entrusted this task to independent companies. However, the company prevented this practice from being disclosed to the public because it feared a negative impression on its own reputation.
Court bans Robinhood from restricting crypto investors
Part of the agreement is a court requirement that Robinhood is no longer allowed to refuse to pay out cryptocurrencies to users. Customers must be given the opportunity to pay out Bitcoin and other currencies to their own wallet at any time.
According to Lucas Moskowitz, Robinhood’s general counsel, the company is chastened and is pleased to be making cryptocurrencies more accessible and overcoming existing barriers.
How seriously this portrayal can actually be taken remains questionable. At the beginning of August, Robinhood made negative headlines in the crypto scene. While the crypto market was recording losses, Robinhood shut down trading.
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Users were therefore unable to sell their coins directly on the marketplace while prices were changing rapidly.
