Robinhood's Legal Hurdle

A United States federal judge has approved a $9 million settlement in a class-action lawsuit against the crypto and stock trading platform Robinhood.

On July 17, Robinhood Financial LLC was ordered to pay $9 million to settle a lawsuit regarding its 'refer-a-friend' program, which enabled sending unsolicited text messages in Washington.

Judge Barbara Rothstein of the US District Court for the Western District of Washington agreed with the plaintiff's motion that this violated the state's consumer protection laws.

**The judge also awarded $2.2 million in attorney fees, which finalized a $9 million settlement.

Judge Rothstein found the settlement terms fair, reasonable, and adequate 'in light of the complexity, expense, and duration of litigation and the risks involved in establishing liability and damages.'

Scope of the Class Action

Terrell Marshall Law Group and Berger Montague filed the class action for all individuals who received a Robinhood referral program text message and were Washington state residents from August 2017 to February 2024.

However, it excluded those who consented to receive Robinhood referral program text messages. The Robinhood 'refer a friend' program allowed users to generate and send texts to their phone contacts via the trading app inviting them to join the platform.

According to the 2021 lawsuit, this violated Washington state's Commercial Electronic Mail Act and Consumer Protection Act.

Market Impact and Future Prospects

Robinhood stock (HOOD) fell 1.8% on July 18, settling at $24.18 in after-hours trading. However, the trading firm's share prices have doubled since the beginning of this year. It is not the first time Robinhood has been in legal hot water.

In May, the US Securities and Exchange Commission indicated that it intended to file legal action against the firm, arguing that its crypto trading operations violated securities laws. Nevertheless, the company still expanded its crypto ambitions by acquiring leading crypto exchange Bitstamp in June.

'The judge found the settlement terms fair, reasonable, and adequate.'

Robinhood's Expanding Horizons

Despite these legal challenges, Robinhood continues to progress in cryptocurrency. The recent acquisition of Bitstamp aims to enhance its institutional trading capabilities in the US. This strategic move indicates that Robinhood is staying strong despite these legal setbacks.

Conclusion

Robinhood's $9 million settlement marks another chapter in its ongoing legal battles. The settlement reminds us of the complexities and risks involved in the rapidly evolving fintech and crypto landscape.

As Robinhood navigates these challenges, its focus on expanding its crypto operations suggests a resilient and adaptive strategy for future growth.