$9 Million Robinhood “Refer-A-Friend” Settlement Deal Approved By Judge

Crypto trading platform and investment app Robinhood has formally settled a $9 million class-action lawsuit stemming from its “Refer-A-Friend” program, new court documents reveal.

Crypto Trading Platform Robinhood Settles Refer-A-Friend Lawsuit

The financial services app was originally sued back in 2021 by Cooper Moore and Andrew Gillette for allegedly violating consumer protection laws in Washington state by sending unsolicited text messages aimed at advertising the user rewards program.

Judge Barbara Rothstein officially signed off on the agreement on Wednesday, July 17, with $2.2 million of the “Refer-A-Friend” settlement’s total set aside to pay for attorney’s fees.

“The Court finds that the terms of the Settlement Agreement are fair, reasonable, and adequate in light of the complexity, expense, and duration of litigation, and the risks involved in establishing liability and damages and maintaining the class action through trial and appeal,” the motion reads.

Robinhood Hit With Wells Notice From The SEC

News of the settlement deal comes just two months after Robinhood was served with a Wells Notice from the United States Securities and Exchange Commission (SEC), indicating the federal regulators’ intent to file an enforcement action against the crypto trading and investment platform.

Robinhood has received a Wells notice from the SEC over its crypto business, indicating that the agency's crackdown on crypto could soon ensnare one of the most popular US brokerage firms. Comes after Wells notices to Uniswap Labs and Consensys last month https://t.co/otEiMQgfCa

— Alexander Osipovich (@aosipovich) May 6, 2024

While no expletive legal challenge was provided, the future enforcement action “may involve a civil injunctive action, public administrative proceeding, and/or a cease-and-desist proceeding and may seek remedies that include an injunction, a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and censure, revocation, and limitations on activities.”

The move by the SEC may be seen as part of its larger campaign of regulation-by-enforcement toward the digital asset sector and could challenge Robinhood on its compliance with U.S. securities laws.

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,” Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer, Robinhood Markets, Inc said in a statement at the time. “We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”

The lack of a clear regulatory framework across the digital asset sector in the United States has been a hot-button topic for the blockchain industry, with concerns that the lack of clarity may drive emerging digital finance companies overseas.