The investigation revealed that Robinhood had assured users that it would hold all purchased cryptocurrencies on their behalf, but sometimes allowed trading venues to hold assets without user notification.

CFO Jason Warnick expressed optimism that clearer regulations would facilitate faster innovation and a broader range of cryptocurrency options.

California Attorney General Rob Bonta announced a $3.9 million settlement with Robinhood, addressing violations of the California Commodities Law related to customer cryptocurrency withdrawals from 2018 to 2022.

The settlement resolves an investigation into Robinhood's practices, which included misleading customers about the custody of their crypto assets and the availability of competitive trading prices.

The agreement requires Robinhood to clarify its trading practices and update its Customer Agreement to disclose potential delays in asset settlement due to security concerns.

As part of the settlement, Robinhood did not admit or deny any wrongdoing.

The company intends to challenge the SEC's claims, arguing that the assets on its platform are not classified as securities.

Following the settlement announcement, Robinhood's stock saw a slight decline of 1.34%, closing at $19.11, though it has experienced a year-to-date increase of 54.49%.

Bonta emphasized the importance of consumer protection laws in his statement regarding the settlement.

Despite regulatory challenges, Robinhood reported strong second-quarter earnings in 2024, with revenues reaching $682 million, a 40% year-over-year increase.

In the same quarter, Robinhood's cryptocurrency revenue surged to $81 million, marking a 161% increase compared to the previous year, surpassing its equity transaction revenues.

Robinhood is expanding its cryptocurrency operations, having announced plans to acquire the European crypto exchange Bitstamp, with the deal expected to close in the first half of 2025.