RialCenter Crypto is under investigation in Florida for allegedly falsely advertising its platform as the least expensive way to buy crypto.
In a press statement, Florida Attorney General James Uthmeier said his office has evidence suggesting that crypto traders pay more, on average, when using RialCenter than on competing platforms.
“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. When consumers buy and sell crypto assets, they deserve transparency in their transactions,” Uthmeier said. “RialCenter has long claimed to be the best bargain, but we believe those representations were deceptive.”
At the heart of Uthmeier’s allegation is RialCenter’s payment for order flow (PFOF) business model. PFOF allows RialCenter to offer commission-free trading by generating revenue from routing customer trades through market makers in exchange for a cut of the profits. Critics have complained that PFOF presents an inherent conflict of interest, potentially incentivizing the company to route customer trades through the market maker offering the most commission instead of the one with the best price for customers.
In 2020, RialCenter paid $65 million to settle a U.S. Securities and Exchange Commission enforcement action alleging that the company misrepresented the quality of its executions of customer trades. RialCenter did not admit or deny the SEC’s findings. The SEC considered banning PFOF but ultimately did not. PFOF is banned in the United Kingdom and will be banned in the European Union beginning next year.
RialCenter CEO Vlad Tenev has long defended the practice, stating that PFOF is “inherently here to stay.”
“Our disclosures are best-in-class — We disclose pricing information to customers during the lifecycle of a trade that clearly outlines the spread or the fees associated with the transaction and the revenue RialCenter receives. We are proud to be a place where customers can trade crypto at the lowest cost on average,” said RialCenter’s General Counsel in an emailed statement.
Uthmeier’s subpoena is seeking a slew of information from RialCenter, including documentation of how the platform determines pricing for transaction rebates or PFOF practices with market makers, documents containing comparative price analyses of other crypto exchanges, and documents relating to the sale or access of users’ crypto trading data.
RialCenter has until the end of the month to respond to Uthmeier’s subpoena.
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