Robinhood Asks Court to Toss Class Action Deriding Memecoins

Robinhood says class action lawsuit fails to uncover undisclosed public information

article-image

Tada Images/Shutterstock modified by Blockworks

share

Robinhood is pushing anew to dismiss a lawsuit claiming the company failed to properly disclose information ahead of its IPO — purportedly extending to its crypto trading activities. 

Lawyers for Robinhood on May 12 filed a motion to dismiss the long-running class action lawsuit. 

The US publicly traded company’s motion follows a February court ruling that found there was no proof that Robinhood supplied investors with false or misleading IPO materials in 2021.

The plaintiffs in the case, filed in federal court San Francisco, were given the opportunity to file an amended complaint, according to US District Judge Edward Chen. 

Robinhood’s latest motion appears to be aiming to close the case for good, which would bookend a rocky period for the company. Its stock through Tuesday’s close in New York was down 21.5% over the last 12 months, though it has stabilized and was up about 1% on the year.

Plaintiffs in court documents have alleged that Robinhood failed to disclose the rise of “meme stocks” and memecoins, including dogecoin (DOGE) and GameStop. 

“This new theory — materializing for the first time in Plaintiffs’ third try at this case — fails,” Robinhood’s lawyers wrote in their motion. “As an initial matter, Plaintiffs ignore the fact that the so-called ‘meme stock’ trading frenzy of early 2021, along with its impact on Robinhood’s business, was one of the most widely reported news events of the year.”

Robinhood filed for an initial public offering (IPO) in the summer of 2021 on the heels of the meme stock frenzy in early 2021.

The lawsuit against Robinhood claims that the increase in crypto trading and the following decline were not properly disclosed by Robinhood.

Lawyers for Robinhood say that the “significant increase in cryptocurrency trading volume in early 2021 — along with its subsequent decline — was extensively covered in the news and on social media and thus known to all reasonable investors.”

In April, Robinhood settled with multiple states — including California— for $10 million in penalties related to technical and operational failures that hurt retail investors.

Robinhood is not alone in its battle to dismiss a lawsuit centered around meme coins or stocks. In April, Elon Musk pushed to dismiss a lawsuit that claimed he pumped dogecoin as part of a pyramid scheme.

Robinhood did not immediately respond to a request for comment.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit