FINRA ordered free-trading app Robinhood to pay $70M for ‘systemic supervisory failures’ and ‘false information and outages’ that harmed thousands of consumers
Remember Robinhood, an online broker and free-trading app that restricted thousands of retail investors from trading Dogecoin back in April? The company’s past always is now catching up with the founders.
Today, U.S. financial regulator, the Financial Industry Regulatory Authority (FINRA), has ordered Robinhood Financial LLC to pay $70 million for ‘systemic supervisory failures’ and causing ‘significant harm’ to millions of customers with misleading or false information and outages.
According to the announcement, the fintech startup will pay $12.6 million in restitution to thousands of consumers as well as a $57 million fine, the largest financial penalty ever issued by the Financial Industry Regulatory Authority (FINRA), the regulator said.
Back in April, Dogecoin investors accused Robinhood app of blocking crypto trades after Elon Musk sparks Dogecoin frenzy. Over 75% of retail investors now said they plan to leave Robinhood blaming the company for manipulating the markets. Some Robinhood users also filed a class-action lawsuit against the company’s decision to restrict the transactions of individual investors, while allowing hedge funds to trade the stocks freely.
Founded in 2015 by co-founders and Co-CEOs Vlad Tenev and Baiju Bhatt, Robinhood provides commission-free trading for several major cryptocurrencies, including Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ether (ETH), Litecoin (LTC) and Ethereum Classic (ETC).
Robinhood also offers commission-free U.S. equity and options trading, as well as margin and extended hours trading through Robinhood Gold. The platform also offers real-time market data for nearly a dozen more digital assets. Robinhood currently has over three million users and billions of dollars in transaction volume.