Florida Attorney General Initiates Crypto Investigation: Robinhood's Cost-Claim Criticized
Florida's Attorney General James Uthmeier has launched an investigation into Robinhood Crypto, a subsidiary of Robinhood Markets, for allegedly violating Florida's Deceptive and Unfair Trade Practices Act. The investigation centers on claims that Robinhood Crypto falsely promoted its platform as having "the lowest trading costs," particularly related to its use of the payment for order flow (PFOF) model [1][3][5].
This probe reflects broader regulatory scrutiny that Robinhood has faced in recent years, including fines and settlements for securities violations, identity verification failures, crypto withdrawal issues, and product marketing practices [5]. The Florida investigation adds legal risk and uncertainty, potentially affecting Robinhood's long-term market sentiment and stock volatility [3].
The investigation centres on Robinhood's PFOF model, which involves the company routing orders to third-party firms, and these firms filling the trades and paying Robinhood for the order flow [2][4]. Critics argue that this structure could make trades essentially more expensive despite being labeled "zero commission."
Lucas Moskowitz, General Counsel at Robinhood Markets, defended the company's practices, stating that their disclosures are best-in-class and that they are proud to be a place where customers can trade crypto at the lowest cost on average [6]. However, the Attorney General's office appears to be focused on the effectiveness and clarity of Robinhood's disclosures, especially in marketing messages that present Robinhood as the most affordable option without sufficient explanation of the trade-offs [4].
The subpoena demands internal documents by July 31, 2025, as the AG seeks to determine if the platform violated Florida's consumer protection laws. The subpoena demands a wide range of documentation from Robinhood Crypto, including marketing materials, internal organisational charts, pricing models, training manuals, user communications, comparative analyses, details on best execution and transaction pricing, number of Florida users, and their crypto trades during 2024 [7].
The outcome of the investigation could reshape how commission-free crypto platforms present their pricing, as the U.S. Securities and Exchange Commission (SEC) has already adopted rules that require traditional brokerages to disclose PFOF relationships and trade execution quality [8]. For crypto investors in Florida and beyond, the case could serve as a wake-up call to dig deeper into how "zero-fee" platforms actually work. Understanding what's hidden behind free services is now as important as understanding the assets themselves.
- The Florida Attorney General's investigation into Robinhood Crypto involves an examination of the company's claims about having "the lowest trading costs," which is under scrutiny because of its use of the payment for order flow (PFOF) model.
- The Florida probe adds legal risk and potential impact on Robinhood's long-term market sentiment and stock volatility, as the investigation centers on the effectiveness and clarity of Robinhood's disclosures, especially in marketing messages that present Robinhood as the most affordable option.
- The subpoena issued in the Florida investigation demands internal documents from Robinhood Crypto, including marketing materials, organizational charts, pricing models, user communications, comparative analyses, best execution and transaction pricing details, number of Florida users, and their crypto trades during 2024.
- The outcome of the Florida investigation could lead to changes in how commission-free crypto platforms present their pricing, as it could reshape the industry, and for crypto investors, understanding the workings of "zero-fee" platforms is now as important as understanding the assets themselves.
