Attorney General James Uthmeier of Florida has started a Robinhood study on accusations that the retail giant of the retail trade wrongly promotes his crypto platform as the least expensive way to buy digital assets.
Uthmeier notes that Robinhood earns income by using customers transactions to external market makers in a paying-for-order flow (PFOF) system.
The attorney -general says that Robinhood attracts customers by claiming the “lowest costs on average” to trade crypto. However, Uthmeier claims that the PFOF structure of Robinhood actually makes it more expensive than competing platforms that offer all-in trading costs.
“When consumers buy and sell Crypto assets, they earn transparency in their transactions. Robinhood has long claimed as the best bargain, but we believe that those representations were deceptive.”
The Attorney General says that third-party market makers pay Robinhood for order flow, sometimes worse prices have to charge to be profitable.
Uthmeier has issued a summons and asked Robinhood for organizational documents, employee information, advertising history, disclosures to users with regard to costs, price documents, PFOF information, documents with regard to the sale of customer data and information about the users of Florida specifically.
The Crypto division of Robinhood is obliged to respond to the summons by the end of the month, according to the attorney general.
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