Robinhood shutdown part 2: involuntary liquidations, refunds, and Robinhood's clawback fantasy

Last month I wrote about my initial experience having my Robinhood account closed: two of my positions were liquidated, and my Robinhood Gold membership was briefly canceled, then restarted, which allowed me to continue to earn interest on my substantial (to me) cash balance. I maintained 7 individual stock positions with open limit sell orders, one of which was executed at the specified limit price after this saga began.

Since then, another stock (WEN) was sold at my limit price, leaving me with 5 remaining open positions.

Having finally received the overwhelming bulk of my money back, here’s the rest of the story.

Involuntary liquidations

On August 27, 2025, I received 10 e-mails, two for each of my remaining positions: one canceling my outstanding limit sell order, and one informing me that a market sell order had been executed. Since I received the first notificationt that my accounts were being closed on July 30, these involuntary liquidations happened exactly 4 weeks to the day after my first notice.

Refunds to originating sources

On August 26, I received an e-mail from Robinhood stating: “At this time, we are actively working with your financial institution(s) to attempt to return the funds that were deposited into your Robinhood account back to their originating source(s). Thank you for your patience.”

I was naturally deeply curious how this process would work, for two reasons.

First, I had been using my Robinhood account for a wide array of hijinx, including meeting monthly debit card transaction requirements and earning rewards on rewards-earning debit cards. It made sense that they could in principle refund these transactions to the funding debit card using the normal Visa and MasterCard “rails.”

But second, I had a substantial amount of accumulated interest and capital gains in my account: how could they “refund” money that didn’t have a deposit source, but rather was generated by the market itself?

All my funding transactions were reversed for the period between May 27 and July 24, 2025 (the last day I transacted before I was shut down). Because these were processed as individual “refunds,” not as normal transfers out, I have not even attempted to match them up with the corresponding deposits in my various accounts, but using my July brokerage statement as a guide, I’ve received my entire account balance, plus at least part of my August interest, back in my assorted accounts.

In other words, if Robinhood did steal any money from me in the course of this process, it’s in the low double digits.

Robinhood’s clawback fantasy

Robinhood, on the other hand, has a different concern: they think I owe them money because my account wasn’t open long enough to “earn out” the rewards I received by transferring money onto the platform.

While they refunded 100% (plus interest and gains) of my funding transactions, my Robinhood account now has a purported “deficit” of a little over $1,800. As far as I can tell, this reflects the amount of various bonuses I received for transferring in cash or assets that required a holding period of 5 years to fully “earn out.”

It gives me nothing but pleasure to think of the time and money Robinhood will waste trying to extract this money from me, which they will never do.

Traditional and Roth IRA accounts

I also have small traditional and Roth IRA accounts with Robinhood, in order to earn the unlimited 3% Robinhood Gold funding bonus, which were not closed or involuntarily liquidated. Instead, I was given 60 days to liquidate and transfer my retirement accounts. Robinhood charges a $100 outbound ACATS (in-kind security transfer) fee, so to avoid that fee I’ll have to transfer the balances to my external checking account and execute what the IRS calls a “60-day rollover” to my other IRA balances.

Conclusion

Robinhood is a gimmick company for a gimmick economy, which makes it perfectly suited for many specific travel hacking needs.

It also belongs to a sector that is still regulated comprehensively enough that there is almost no chance of them taking your money and never giving it back.

However, that doesn’t mean getting your money back, while inevitable, will be fun or easy, which makes the ancient advice as applicable as it ever was: don’t float Robinhood money you can’t stand to be without, because you have no way of knowing when you’re going to get it back.