Navigating Challenges: A Call to Address $81K of USDC Issues with Robinhood

Hello r/ethereum,

I've tried making this post on r/wsb and r/robinhood but they've both refused to allow it. So I think this is probably the next best place. It's directly relevant to Ethereum and USDC. These exchange issues directly harm and impact users.

Robinhood has refused to credit or return $8,400 I sent them over a month ago. While some might be quick to blame me, I'm not the only one in this situation. I have found what I believe to be 371 other Robinhood users who can't access their funds because Robinhood refuses to 1. accept the funds, or 2. return the funds. I'll explain later why returning the funds would be trivial, and in fact, I've done 95% of the work for them.

This isn't just my fight; it's indicative of larger systemic issues that can affect any trader on platforms that don't communicate clearly.

How it all started:

In March 2024, I sent $8.4k to my USDC.e deposit address on Robinhood. I have deposited over $100k in USDC.e to this address over the past 2 years. I've never had any problems, so I wasn't initially concerned about the transaction. However, I checked the app and the supported assets webpage for information regarding whether they supported USDC, USDC.e, or both. Seeing as there was no explicit mention regarding the distinction between USDC and USDC.e, or any warning not to send one or the other, I defaulted to what I had sent in the past. (Kraken and Coinbase both support USDC and USDC.e and detail it explicitly on the deposit page as well as within the assets site.)

Communication Fails:

After a few hours of the deposit not being reflected in the app, I started to get concerned. So, I contacted support (the first of over 10 attempts I've made). In short, they told me there's nothing they could do, that they were sorry, and after my asking for them to escalate the issue, they said they would. Apparently, between my last transaction and this one, they switched from USDC.e (previously referred to as USDC) support to USDC (a new USDC). They assured me they would reach out via email once it had been escalated. This did not happen.

I then continued to contact them over the following two weeks, hoping to finally get the case escalated. After weeks of trying, I was told I got escalated to the highest level!

Except, they told me the same thing—a polite dismissal. Throughout this time, support occasionally stated factual inaccuracies regarding the recoverability of the funds.

Regulatory Hoops:

After spending two weeks trying to get support to help me, I gave up on that avenue. I decided to reach out through the BBB, CFPB, and OBFC to jolt Robinhood into action!

But no. Unfortunately, their response was highly unsatisfactory; let me outline the absurdity.

BBB: They did not engage directly with the matter and instead referred to a previous support claim.

CFPB: They failed to respond in the allotted 15-day window typical for companies. Once they did respond, they simply rehashed previous support discussions and referenced their terms of service.

OBFC: I received their response directly. They copy-pasted the CFPB response and changed six words. They replaced "CFPB" with "Oregon Division of Financial Regulation" within the text.

As you can see, these complaints with government agencies did not seriously progress the recovery of my funds as I had hoped they might.

BUT I DON'T GIVE UP THAT EASILY!

So I reached out to Robinhood via certified mail, sending it to both their legal office and their Menlo Park headquarters. The response I received was effectively the same!

So I thought, maybe, given Robinhood's position at the forefront of tech, they would prefer if I reached out on Twitter! So I did that too. I contacted the head of crypto and a former employee asking if there was any way they could help me with my issue. Neither responded.

Oh, and I almost forgot... at the beginning, I also contacted investor relations (yes, I'm a Robinhood shareholder ????). They never responded...

Legal Jungle, a Last Resort:

As you might know, suing Robinhood is harder than you might think! The terms of service force you into binding arbitration. However... the arbitrator for Robinhood Crypto LLC is AAA, and AAA rule R-9 explicitly states that if you meet the requirements below, you can instead go to small claims court

Therefore, if you have a crypto-related claim, you can sue them directly in small claims court!

This is fantastic; they try to force you into arbitration for a reason. It's because it sucks for any single individual to go through.

So that's what I've gone forward and done. I have an ongoing lawsuit with Robinhood, which so far they have contested and denied my claim. This is expected, but it means I will have my day in court, unless Robinhood decides to rectify this issue or settles early with me.

This denial yesterday, however, prompted me to do some on-chain analysis to see the scope of the problem.

The Jungle Is Full Of Prey:

The immutable and transparent nature of blockchain technology allowed me to find that customer funds are indeed under Robinhood’s control and could technically be rectified with a few strokes of the keyboard.

It took me 5 minutes of work to find 371 unique Robinhood users with a total of $81,000 in USDC.e stuck in Robinhood's custody, with no publicized pathway to recovery. The number is likely much larger. We are looking at 1 asset, over 161 days, on one chain. Additionally, the discoverability of user Robinhood accounts is challenging! We are only looking at accounts that have also successfully sent deposits. Users who sent the wrong USDC and then never sent USDC again are not detectable.

This situation is more than just a personal financial hiccup; it's a glaring example of what happens when a platform's user interface design and customer communication are not up to the task.

To really illustrate the egregiousness, imagine a company supported both USD via Venmo and USD on Cash App. Then one day, without adequately updating the payment page, they stop accepting Cash App payments. You go to buy your favorite stuffed animal with Cash App. Sadly, the plushy never arrives, and now you need to worry about your options expiring worthless without your support animal. Imagine, instead of refunding you, they decide they can just hold onto your money, leaving you doubly screwed. This would not fly at any bank, but for some reason, Robinhood has deemed it acceptable when it comes to US-regulated crypto products like USDC.

Over the past 161 days, it appears that there have been 371 users who sent the wrong version of USDC. How is this possible? It's because the app doesn't notify the user of the change, or warn them. All previous USDC.e deposits are still labeled as USDC in the app. There is no mention of Native or Bridged USDC within the app, no USDC.e vs. USDC. They make zero attempt to communicate this to users within the app. In fact, they never changed a single thing regarding the deposit interface post-transition! Robinhood has failed to rectify these simple problems after I repeatedly notified them. This is unacceptable. I have since notified regulatory agencies about the scope of users affected and the size of user assets in their possession.

The funniest part, however, is that on October 31st, Robinhood sent out an email instructively suggesting that if users sent USDC (note: they do not specify which type of USDC, but one can assume they are referring to USDC.e), they should just contact support for assistance (importantly, this is the only time they communicated the change, of which I am aware).

To what end, though?

Just so the unlucky souls can be politely informed by some weary support worker that they've effectively lost what amounts to a year's salary in China? And then, as the dreadful reality dawns on them, these distraught customers might unleash a hostile barrage on the support staff—who, let's be honest, are probably just as frustrated with the predicament. (A reminder: treat support staff nicely, please. Their job sucks enough dealing with you guys.)

Anyways,

I've attached the code for this analysis here, feel free to use it to verify the results, expand the search for other assets, other chains, or to tell me what I got wrong.

The triviality in rectifying this injustice...

The most heart-wrenching part of this whole ordeal is the triviality of rectifying it. I've generated the transactions for recovering the USDC.e from all 371 users and posted them online. All Robinhood would need to do is sign off on these messages, and every single user would be made whole at an insignificant cost to themselves.

Instead of wasting 4 weeks of my time, countless hours of support staff resources, the strained resources of our great judicial system, and Robinhood's legal team's time, they could have, and still can, make users whole for pennies and in a matter of hours.

This is just scraping the surface of things I have found regarding Robin

hood crypto. But that's for another day.

If you are a Robinhood employee or Vlad Tenev, and you would like to resolve this issue, you can contact me here on Reddit, or at this burner email. I will follow up with the resolution of this saga, hopefully sooner rather than later.

Thank you for reading this; it feels good to get it off my chest. But please, you can now go back to buying 0dte's on McDonald's stock.

TL;DR: Robinhood is in custody of my and other users' funds, they refuse to take action to recover them, I am suing them because of this.