Robinhood Chain outage and AMC token dispute amid surge

On Sept. 4 Robinhood Chain halted block production for at least 14 minutes, pausing new blocks and delaying transactions on the Ethereum layer-2 network. The interruption occurred roughly two months after the network’s public mainnet launch. Robinhood had not disclosed the cause of the stoppage.

The pause happened while the chain was handling heavy trading and token activity. Network metrics show a recent period of elevated onchain use and higher fee volume around the time of the outage.

An industry analyst estimated Robinhood Chain has generated about $23 million in cumulative fees since launch, including roughly $4 million in a recent 24-hour period. Data from a market tracker estimated the chain accounted for about 78.5% of layer-2 blockchain revenue over the past 30 days. Daily revenue on the chain peaked near $4.6 million during that run of activity.

Decentralized finance usage on the chain also rose. Total value locked climbed about 27% over a week to roughly $840 million, and decentralized exchange activity increased as users moved assets and trades onto the network. Stablecoin holdings on the chain are close to $1 billion.

Robinhood is pursuing revenue beyond transaction fees. An analyst estimated Robinhood could have earned roughly $1.7 million from its share of USDG economics at a 3% annual yield. Crypto assets under management on Robinhood increased by about $4 billion recently, with a further $600 million gain at Bitstamp. Robinhood has not published a full fee schedule for minting or redemption charges tied to Stock Tokens.

Robinhood’s Stock Tokens are ERC-20 instruments issued by Robinhood Assets Limited that provide holders with economic exposure to U.S. shares and ETFs. Token holders do not receive legal or beneficial ownership of the underlying shares and have no claim against the tracked company. The tokens are not registered under U.S. securities laws and are not offered to U.S. persons.

Corporate pushback surfaced the same week as the outage. AMC Entertainment’s CEO Adam Aron posted on X that the tokens “are not registered under U.S. securities laws” and called the practice “contemptible, outrageous, disgusting, detestable, inexcusable, vile,” adding that AMC had no connection to the token and did not condone it. He asked Robinhood to “voluntarily CEASE AND DECIST the trading of AMC stock tokens” and said he had asked outside securities counsel to review the offering. Robinhood’s chief legal officer, Dan Gallagher, replied that the firm would not stop trading the AMC token and wrote, “We know a little something about the US securities laws and will not ‘DECIST.’ Send your lawyers and we’ll educate them.”

Adoption of tokenized stocks has grown rapidly. Token Terminal data show Robinhood reached about 862,800 holders of its Stock Tokens in roughly two months, narrowly ahead of another large issuer. The broader tokenized-stock market expanded to about 2.6 million holders over six months. Tokenized stocks generated roughly $6.4 billion in decentralized exchange volume over the past 30 days, with roughly $3.1 billion on one exchange and $2.5 billion on another. On Robinhood Chain, Stock Tokens represent over $200 million of active real-world assets.

The outage and the dispute over Stock Tokens occurred while Robinhood added more financial products and overall user activity was rising. The brief stoppage interrupted transactions during a peak period for fees and tokenized trading on the network.