- As part of the current probe, Florida authorities have subpoenaed Robinhood for documents concerning crypto pricing, order routing, and use of user trading data.
- Despite advertising a “commission-free” model, consumers may end up paying more when using Robinhood’s crypto services, according to state’s Attorney General.
Robinhood is under investigation in Florida over claims that its cryptocurrency platform misled customers about trading costs. The state’s attorney general, James Uthmeier, said his office has evidence that contradicts Robinhood’s marketing, which has presented the platform as the cheapest way to trade digital assets.
In a statement on Thursday, Uthmeier said consumers may actually pay more when using Robinhood’s crypto service, despite its “commission-free” model. The probe focuses on the company’s use of payment for order flow (PFOF), a practice that routes customer trades through market makers in exchange for rebates.
“Crypto is a vital component of Florida’s financial future, and President Trump’s efforts to advance the crypto market will make America stronger and wealthier. When consumers buy and sell crypto assets, they deserve transparency in their transactions,” said Attorney General James Uthmeier. “Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive.”
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PFOF Model Faces Renewed Scrutiny
Robinhood’s PFOF model has come under criticism in the past for potentially prioritizing revenue over best execution for users. While the practice allows for zero-commission trades, regulators and critics argue it may result in less favorable pricing for retail investors.
Robinhood previously settled a $65 million enforcement action with the U.S. Securities and Exchange Commission in 2020 over misleading statements about trade execution. The company neither admitted nor denied wrongdoing.
PFOF is banned in the United Kingdom and will be prohibited in the European Union beginning in 2026. The SEC under Chair Gary Gensler considered a similar move, but ultimately stopped short of a full ban.
As part of the investigation, Uthmeier’s office has subpoenaed Robinhood for records related to its crypto pricing, order routing practices, and comparisons with other trading platforms. The state is also seeking documents on any sale or use of user trading data. The probe could intensify pressure on zero-commission platforms to clarify how they profit from trades and what costs are ultimately passed on to consumers.
