Robinhood Offers Crypto Trading “at the Lowest Cost,” but Is It False Advertising?

Robinhood (Nasdaq: HOOD) is facing an investigation by Florida’s top prosecutor for claiming that it offers crypto trading “at the lowest cost on average.” The state cop is also issuing a subpoena to the trading platform to uncover internal documents.

“The Least Expensive Way to Purchase Crypto”

According to Florida’s Attorney General, James Uthmeier, Robinhood’s crypto unit falsely promoted its platform as “the least expensive way to purchase crypto—when there is evidence to suggest that is not true.”

The prosecutor stated that Robinhood Crypto is allegedly violating the state’s Deceptive and Unfair Practices Act.

“When consumers buy and sell crypto assets, they deserve transparency in their transactions,” said Attorney General James Uthmeier. “Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive.”

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The authority is questioning Robinhood's payment-for-order-flow (PFOF) model, which it also uses to execute crypto trades. Instead of charging a commission, the company earns revenue by routing customer trades to third-party firms in exchange for payment.

“There is evidence that trading on Robinhood is actually more expensive than trading on competing platforms due to its PFOF structure versus competitors offering all-in trading costs,” the prosecutor’s office stated.

In a statement, Robinhood's General Counsel, Lucas Moskowitz, noted: "We disclose pricing information to customers during the lifecycle of a trade that clearly outlines the spread or the fees associated with the transaction and the revenue Robinhood receives."

Crypto Is a Key Revenue Driver

Although Robinhood became popular for commission-free stock trading, crypto has become one of its main sources of income. Revenue from crypto has even overtaken its earnings from options trading, which was its top earner for years.

However, in the first quarter of 2025, revenue from crypto dropped to $252 million, about 30 per cent lower than the previous quarter. The company is now considering reducing its dependence on crypto as trading volumes fluctuate.

The platform recently launched tokenised stocks for its users in Europe. That move, however, stirred controversy as the European Union opened an investigation into the structure of tokenised stocks of several private firms offered on the platform.