Consumer complaint received 2025-03-10 00:00:00
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Other transaction problem — 
Company: ROBINHOOD MARKETS INC.
State: UT

Complaint narrative:
Dear Consumer Financial Protection Bureau ( CFPB ), I initiated a cryptocurrency withdrawal from my Robinhood Crypto account to another broker/exchange XXXX XXXX XXXX Due to their internal safeguards, the receiving broker was unable to process the deposit and returned the funds to the original sending addresswhich was a Robinhood-managed address.

However, Robinhoods system does not support inbound transfers to these addresses, resulting in the total loss of my cryptocurrency.

I am filing this complaint against Robinhood Crypto, LLC due to misleading policies, lack of transparency, and inadequate consumer protections related to cryptocurrency withdrawals. 
Specifically, Robinhood fails to disclose critical information regarding the use of hot wallets, the irrecoverability of returned transactions, and misleading wallet structures that create unreasonable risk for consumers. 

Issue Summary : 1. Misleading Wallet Structure & Lack of Clarity on Hot Wallet Use Robinhood presents its cryptocurrency services in a way that leads users to reasonably assume that they have control over their wallet addresses and can both send and receive crypto to/from the same wallet. However, in practice : - Robinhood does not explicitly disclose that outbound transactions are sent from a pooled hot wallet rather than a user-controlled address. 
- While their Terms of Service ( TOS ) state that transactions are one way, this ambiguity does not make it clear that the outbound wallet address is not owned or controlled by the user.

- There are no on-screen warnings at the time of submission to notify the user that Robinhood is using a hot wallet. This is only disclosed in a buried Additional Info section and their TOS, which users are unlikely to see before making transactions. 
- This misrepresentation creates a false expectation that users can send and receive crypto to/from the same wallet address, which is not the case. 
2. Failure to Disclose Risks of Returned Transactions Between Brokers I recently experienced a failed transaction between Robinhood Crypto and another broker XXXX XXXX XXXX XXXX that led to total loss of funds due to Robinhoods unclear return policies.

- The receiving broker rejected the deposit and returned the funds to the original sending address, as part of their own security safeguards.

- However, Robinhood does not support inbound transfers to their own sending addresses, meaning the returned crypto became irrecoverable. 
- permanently lost. 
- There are no safeguards in place beyond a buried TOS clause and an " Additional Info '' section. No real-time warning is displayed when initiating a transaction.

This practice is highly problematic because it deviates from standard industry expectations, where most exchanges provide clearer return policies or allow funds to be reassigned to the correct user upon return.

Why This is a Consumer Protection Issue : - Lack of Transparency : Robinhood does not properly disclose that outbound crypto transactions come from a hot wallet rather than a user-controlled wallet.

- Misleading Withdrawal Policies : By structuring its crypto wallets in this way without warning users, Robinhood creates a false expectation that users are transacting from an address they control. 
- Failure to Protect Users from Irrecoverable Losses : There are no effective safeguards in place to warn users of the risks associated with returned transactions, despite these transactions being a foreseeable issue in broker-to-broker transactions. 
- Robinhoods Terms of Service ( TOS ) Do Not Clearly Address Broker-to-Broker Return Scenarios : This omission leaves users unaware of the risk that returned funds will not be recoverable.

Request for Regulatory Review : I request that the CFPB, SEC, and FINRA investigate Robinhood Cryptos policies and practices for potential consumer protection violations and take the following actions : 1. Require Robinhood to Clearly Disclose at the Time of Transaction Submission that outbound crypto transactions are sent from a hot wallet, not a user-controlled address.

2. Mandate Clear and Accessible Warnings about the risks of irrecoverable losses when another broker returns a transaction.

3. Investigate Whether Robinhoods Handling of Returned Transactions Violates Regulatory Obligations, including whether they are improperly managing user funds that are returned to their platform.

4. Review Whether Robinhoods Terms & Conditions Adequately Inform Consumers about these risks in compliance with financial transparency and consumer protection laws.

I am willing to provide transaction records, customer support correspondence, and other supporting documentation upon request. 
Please let me know if additional information is required. Thank you for your time and attention to this matter.

Company response to consumer: Closed with explanation