Florida Attorney General James Uthmeier has launched an investigation into Robinhood Crypto, LLC, alleging that the company misled consumers by promoting its platform as the "least expensive" way to purchase cryptocurrency. The Attorney General's office issued a subpoena to Robinhood seeking internal documents to determine if the company violated Florida's Deceptive and Unfair Trade Practices Act.

Uthmeier stated that "Crypto is a vital component of Florida's financial future," and that consumers deserve transparency in their transactions. He added, "Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive".

The investigation centers on Robinhood's claims that it offers the "lowest cost on average" to trade cryptocurrency and promises users will get "the most crypto for your money". However, the Attorney General's office believes that trading on Robinhood may actually be more expensive than on competing platforms.

Robinhood generates revenue through a practice called payment for order flow (PFOF). This involves routing customer trades to third-party firms that pay Robinhood for the opportunity to take the opposite side of customer trades. The Attorney General's office suggests that these third parties might charge less favorable prices to Robinhood customers to maintain profitability.

The subpoena seeks a wide range of documents from Robinhood, including: * Organizational charts and reporting structures * Names of current and former employees in the marketing and trading departments * Marketing materials and advertising documents * Information about fee structures and PFOF practices * Training materials * Analyses of Robinhood's competitors * Cryptocurrency trading data and records of trades by Florida users in 2024 * Communications with Florida users * Agreements with market makers * Policies related to PFOF, rebate practices, and price execution standards

Robinhood has until the end of July to respond to the subpoena. The investigation will examine whether Robinhood's business model hides costs, undermines fairness, or leads to increased fees for its users.

Lucas Moskowitz, Robinhood's general counsel, stated that the platform is transparent about its fees and that customers trade crypto at the lowest cost on average. However, Uthmeier's office contends that evidence shows Robinhood can be more expensive than trading on other platforms due to its PFOF structure.

This investigation comes as regulatory bodies increasingly focus on ensuring transparency and fairness in the cryptocurrency industry. The Attorney General's office aims to ensure that Robinhood's business practices comply with Florida law and that customers receive accurate information about the costs of trading cryptocurrency.