Home CryptocurrencyBitcoin Robinhood Settles ‘Gamification’ Case with Massachusetts Regulator for $7.5 Million

Robinhood Settles ‘Gamification’ Case with Massachusetts Regulator for $7.5 Million

by SuperiorInvest

Stock and cryptocurrency trading app Robinhood settled an enforcement action first filed by the Massachusetts securities regulator in December 2020.

According to a Jan. 18 announcement from Massachusetts Secretary of the Commonwealth William Galvin, Robinhood agreed to pay a $7.5 million fine and “review its digital staking practices” for targeting inexperienced investors in what many described such as the “gamification” of cryptocurrency trading. and actions. Galvin claimed in the original complaint that Robinhood had promoted itself as “some kind of game you could win,” proposing to revoke the company’s broker-dealer license in the state.

“This deal resolves historical issues dating back to 2021 that do not reflect Robinhood today,” Lucas Moskowitz, Robinhood’s deputy general counsel and head of government affairs, told Cointelegraph. “We are pleased to put this matter behind us and move forward steadfastly in our commitment to providing market access to our Massachusetts customers.”

The settlement concluded a roughly three-year legal battle between the trading platform and Massachusetts. Following the December 2020 complaint, Robinhood filed a lawsuit against Galvin’s office to reverse the rule the state claimed the company violated. Following an appeal, the case returned to court in 2023.

In addition to the “gamification” allegations, the Massachusetts securities regulator ordered Robinhood to address “serious cybersecurity issues” as part of the settlement. The trading company said it rejected the premise that its app was “gamified” and said it had “taken numerous steps.” ”to address cybersecurity concerns from 2021.

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“While Robinhood ceased many of its gamification tactics after the Securities Division filed complaints, the settlement in this case ensures that for Massachusetts customer accounts, Robinhood will stop using frequency-linked celebration images in the future. of transactions, push notifications that highlight specific topics. lists and features that mimic gambling,” Galvin’s office said. “Robinhood should also add disclosures to its lists and hire an independent compliance consultant to evaluate other digital engagement practices that remain in use.”

The Financial Industry Regulatory Authority fined Robinhood approximately $70 million in 2021 for causing “widespread and significant harm” to thousands of users. In April 2023, Robinhood reached a $10 million settlement with securities regulators in Alabama, Colorado, California, Delaware, New Jersey, South Dakota, and Texas following allegations that the company failed its customers through multiple interruptions.

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