Robinhood Restricts Crypto Trading Over “Market Conditions”
It takes 20 years to build up a reputation, and about 5 minutes to destroy it. The wise words once spoken by Omaha Oracle and legendary Warren Buffett were true for the case of the (before) incredibly popular trading app Robinhood.
The technological marvel that promised to deliver trading to the masses saw an outflow of billions of dollars this week after it sided with Wall Street over the Gamestop saga. If you don’t know what that means, please read pretty much all of this week’s business stories, great fun, we can assure you.
Out of stocks, into crypto
When markets opened in the US on Friday, millennials and members of Generation Z noticed that Elon Musk had joined Twitter boss Jack Dorsey and signed his bio with the hashtag Bitcoin. This, in combination with the simmering anger of hordes of Reddittors, caused an incredible outflow of money away from stocks and into Bitcoin (and a raft of other cryptocurrencies, most notably Dogecoin).
When Robinhood saw this, they limited buying crypto just as they had limited buying the stocks that the Redditors wanted to purchase.
#Binance will be suspending withdrawals temporarily in order to address a large increase in requests from new unique users.— Binance (@binance) January 29, 2021
Rest assured funds are #SAFU and we apologize for any inconvenience caused.
Updates to follow.
Meanwhile none other than progressive Democratic congresswoman Alexandria Ocasio-Cortez, known as AOC, vowed to investigate Robinhood over the Gamestop story of this week, where millions of small time traders (according to media outlet Motherboard half of all their customers in fact) lost a lot of money when the app made it impossible to buy the stock.
More than half of all Robinhood users own at least some GameStop stock.— Motherboard (@motherboard) January 28, 2021
They are now unable to freely trade it; the app is only allowing users to close out their positions. https://t.co/DgN1H496wx
We now need to know more about RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services Cmte, I’d support a hearing if necessary.
We sure haven’t heard the last of this yet.
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