By Tomi Kilgore
Florida AG launches probe into alleged false promotion of crypto trading pricing, Robinhood responds by saying pricing disclosures are ‘best in class’
Shares of Robinhood Markets Inc. are standing out in early Friday trading, falling while the stocks of others in the cryptocurrency business are surging, and as bitcoin climbs further into record territory.
Robinhood’s stock (HOOD) dropped 1% in premarket trading, after running up 8.1% over the past two sessions to close Thursday at a record high.
Florida Attorney General James Uthmeier has launched an investigation into a Robinhood crypto-trading services subsidiary, Robinhood Crypto LLC, alleging violation of the state’s Deceptive and Unfair Practices Act. Uthmeier alleges that Robinhood falsely promoted its crypto platform as the least expensive way to purchase crypto, while he said there is evidence to suggest that is not true.
“Robinhood has long claimed to be the best bargain, but we believe those representations were deceptive,” Uthmeier said on Thursday.
Robinhood responded to the allegations, saying its disclosures on pricing are “best in class.”
“We disclose pricing information to customers during the life cycle of a trade that clearly outlines the spread or the fees associated with the transaction and the revenue Robinhood receives,” Robinhood General Counsel Lucas Moskowitz said in an emailed statement to MarketWatch. “We are proud to be a place where customers can trade crypto at the lowest cost on average.”
Meanwhile, bitcoin (BTCUSD) was rallying 1.7%. It has shot up 8.9% amid a four-day winning streak, heading for a second straight record close.
Robinhood stock’s decline stands out because it has a high correlation with bitcoin at 0.86 over the past year. A correlation of 1.00 would mean they move exactly in sync. That compares with the correlation of 0.71 between bitcoin and crypto-trading platform Coinbase Global Inc.’s stock (COIN).
Meanwhile, Coinbase shares were rising 1.6% in Friday’s premarket, after climbing 9.6% over the past two sessions to close Thursday at a record high.
MicroStrategy Inc.’s stock (MSTR), which has a correlation of 0.96 with bitcoin, given that it owns nearly 600,000 bitcoin as a treasury reserve asset, rallied 2.9% toward an eight-month high.
Elsewhere, Mara Holdings Inc.’s stock (MARA) rose 3.5% and Riot Platforms Inc.’s stock (RIOT) rallied 3%, with both on track to open at six-month highs.
The gains in crypto-related stocks stand in contrast to early weakness seen in the broader stock market, as S&P 500 index futures (ES00) dropped 0.5%.
-Tomi Kilgore
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