Robinhood is under investigation in Florida

Florida’s Attorney General has opened an inquiry into Robinhood’s crypto business, alleging the company misled customers about the costs of trading digital assets.

The fintech firm is accused of portraying its trading app as the most inexpensive way of purchasing cryptocurrencies, a claim the state’s office says is false.

According to a news release, the Attorney General’s office sent a subpoena seeking internal records related to Robinhood’s crypto offerings and how it sets fees and commissions.

In the release, Florida Chief Financial Prosecutor Brad Uthmeier said, “Crypto is a vital component of Florida’s financial future, and President Donald Trump’s efforts to advance the crypto market will make America stronger and wealthier.”

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

The subpoena demands a wide range of materials. Among them are the reporting lines within Robinhood, the details of the former and current staff in marketing and trading divisions, documents on payment-for-order-flow (PFOF) arrangements, training guides, competitor analyses, overall crypto trading and transaction data, and records of trades placed by Florida residents. Advertising plans and internal discussions of fees and commissions are also included.

Robinhood must comply by July’s end, the statement said.

Robinhood’s business model routes customer orders to outside firms rather than executing trades on its own books. Those third parties pay Robinhood for the privilege of handling orders. Known as PFOF, it lets the company provide trading without commissions while still earning income from partner firms.

The probe will examine whether this system hides costs, undermines fairness, or leads to increased fees for its users.

Last year, the U.S. Securities and Exchange Commission adopted a rule requiring brokerages serving retail investors to reveal more information about trade execution and pricing, including details on PFOF. The change came during an overhaul of market transparency.

Robinhood’s shares are up 150 percent this year

Robinhood shares have soared roughly 150 percent so far this year. The jump reflects strong trading volumes from retail customers and hopes that regulated cryptocurrencies will drive fresh investor interest.

About 1/5 of the stock’s gain followed an event in southern France, where co-founder and CEO Vlad Tenev introduced new crypto features and distributed $1 million in tokens tied to SpaxeX and OpenAI.

An S&P Capital IQ poll sees Robinhood’s earnings per share growing at about 10 percent annually through 2028. While positive, that pace is modest compared with the company’s lofty share price.

Robinhood has recorded net profits in only one year since its public listing, making future income predictions difficult, especially given the volatile nature of the crypto market and shifting policy under President Trump.

If earnings do rise as predicted, Robinhood’s shares would trade at roughly 56 times its projected 2028 profits. By comparison, Interactive Brokers, a direct competitor, has a higher valuation, and Charles Schwab has a value of 14 times. To match Interactive Brokers’ valuation, Robinhood will require double the expected earnings over the next three years.