Florida Attorney General James Uthmeier has opened an investigation into Robinhood Crypto, alleging the platform may have misled customers by marketing itself as the cheapest way to buy digital assets.
“When consumers buy and sell crypto assets, they deserve transparency in their transactions,” Uthmeier said. “Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive.”
Under this model, Robinhood routes trades to third-party market makers, who pay the firm 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, the practice has drawn regulatory scrutiny in recent years, especially in volatile markets.
Robinhood allows users to trade cryptocurrencies and stocks without charging direct commissions. However, the company generates revenue through a process called payment for order flow, or PFOF.
Robinhood’s Zero-Commission Model Masks Revenue From Trade Routing
It added that the subpoena, which demands a response by July 31, would help determine if PFOF compromises transparency or results in hidden fees for users.
In its announcement, the AG’s office accused the Menlo Park-based company of “falsely promoting” its platform as the “least expensive way to purchase crypto.”
