Massachusetts' securities regulator is searching for to revoke the broker-dealer license of cryptocurrency-friendly inventory buying and selling ap
Massachusetts’ securities regulator is searching for to revoke the broker-dealer license of cryptocurrency-friendly inventory buying and selling app Robinhood within the state.
William Galvin, the top of the state’s securities division, mentioned in a brand new administrative criticism that Robinhood has “continued a sample of aggressively inducing and engaging buying and selling amongst its prospects — together with Massachusetts prospects with little or no funding expertise,” Bloomberg studies Thursday.
The brand new submitting is a follow-up to a criticism filed by Galvin’s workplace in December 2020, alleging that Robinhood’s advertising and marketing illegally focused inexperienced buyers.
The state pointed to Robinhood’s current exercise, together with a promotion that gives prospects with money rewards based mostly on new deposits, as proof of a “agency tradition which has not modified.”
Robinhood responded to the brand new criticism, arguing that the motion may stop “thousands and thousands of Bay Staters” from accessing their platform. In December, the corporate mentioned that its platform had almost 500,000 prospects in Massachusetts.
The agency has filed a lawsuit searching for to invalidate a lately adopted fiduciary rule in Massachusetts that state regulators have accused it of violating. Adopted in 2020, the rule requires broker-dealers to behave of their shoppers’ greatest curiosity.
“The Massachusetts Securities Division’s new Fiduciary Rule exceeds its authority beneath each Massachusetts state legislation and federal legislation,” Robinhood mentioned. “Robinhood is a ‘self-directed’ brokerage agency that doesn’t make funding suggestions or present funding recommendation. By its personal phrases, the brand new rule doesn’t apply to self-directed corporations,” the agency famous within the lawsuit.
Robinhood has confronted mounting strain from regulators and customers alike after it turned concerned within the controversial GameStop cease short-squeeze. Robinhood halted shopping for for GameStop inventory in January 2021, drawing the ire of the buying and selling group.
Final 12 months, 20-year-old Robinhood person Alex Kearns dedicated suicide after seeing a $730,000 unfavorable steadiness on his Robinhood app. A word on his pc reportedly posed the query, “How was a 20 12 months previous with no earnings in a position to get assigned virtually 1,000,000 {dollars} price of leverage?” In February 2021, Kearns’ dad and mom filed a lawsuit in opposition to Robinhood over his dying.
Robinhood has been additionally experiencing a lot of technical points, reportedly inflicting main losses for merchants and triggering additional authorized motion in opposition to the corporate.
The latest such occasion occurred on Thursday when Robinhood’s crypto buying and selling platform bumped into technical points as Dogecoin (DOGE) hit a brand new all-time excessive of $0.27.