Robinhood returns to court to defend position in case brought by US state regulator

Lawyers representing cryptocurrency and banal trading app Robinhood faced disconnected against those for the Secretary of the Commonwealth for Massachusetts implicit the legality of a authorities regularisation that could impact however the institution markets itself to imaginable investors.

Under Secretary of the Commonwealth for Massachusetts William Galvin, the authorities securities part filed a ailment against Robinhood successful December 2020, alleging the level illegally targeted inexperienced investors, claiming the signifier was successful usurpation of the state’s fiduciary work standards. Galvin reportedly said astatine the clip that Robinhood was selling itself arsenic “some benignant of crippled that you mightiness beryllium capable to win” and aimed to revoke the platform’s broker-dealer licence successful Massachusetts.

Robinhood has argued that the Massachusetts securities regulator exceeded its authorization successful attempting to enforce the fiduciary work rules. In March 2022, a justice mostly dismissed the regulator’s position, leaving the substance connected clasp pending appeal, with oral arguments scheduled for May.

According to a Reuters report, Robinhood’s ineligible squad returned to tribunal connected May 3, claiming Massachusetts instrumentality did not springiness Galvin “the powerfulness to marque behaviour that is ethical nether existing national and authorities instrumentality unethical simply by announcing it to beryllium so.” Lawyers for the Secretary of the Commonwealth for Massachusetts’ bureau reportedly reiterated the regulator’s claims that the fiduciary work aimed to support investors from techniques Robinhood had allegedly used.

The lawsuit followed a tragic communicative from June 2020, successful which a 20-year-old Robinhood capitalist committed termination aft seeing a $730,000 antagonistic equilibrium successful his relationship — reportedly a ​​temporary information that could person resolved itself successful time. The level has besides sometimes been the people of crypto users connected societal media pursuing outages during highest trading periods, resulting successful much than 1 class-action lawsuit.

Related: Robinhood launches fiat-to-crypto on-ramp for self-custody wallets and DApps

In April, Robinhood settled with securities regulators successful Alabama, Colorado, California, Delaware, New Jersey, South Dakota and Texas, agreeing to wage much than $10 cardinal successful penalties “for operational and method failures that harmed main thoroughfare investors.” The U.S. Financial Industry Regulatory Authority besides fined the steadfast astir $70 million successful 2021 for causing “widespread and important harm” to thousands of users.

Stealing from the rich, giving to...regulators? Robinhood ($HOOD) fined $10M colony for strategy outages.https://t.co/FWL0VjYKD1

As of December 2022, Robinhood reported it had astir 500,000 users registered successful Massachusetts, with accounts totaling much than $1.6 billion. Cointelegraph reached retired to the bureau of the Secretary of the Commonwealth for Massachusetts but a spokesperson did not remark connected its position.

Magazine: US enforcement agencies are turning up the vigor connected crypto-related crime