Robinhood is suffering a huge backlash after restricting trading on GameStop.
A crazy week for the stock market has turned into a PR disaster for Robinhood, the trading app that had gained popularity with millennials.
GME started the month at $17.25 but at one point surged by 2,700% to hit highs of $483 during intraday trading on Thursday. By the close, prices had cooled to $193.60.
Tenev said the decision was “in order to protect the firm and protect our consumers,” but Robinhood has faced allegations of bowing to pressure from Wall Street, with some traders vowing to boycott the app altogether.
U.S. politicians have started demanding an investigation into Robinhood’s conduct and at least two class action lawsuits have already been filed, with crypto heavyweights pointing to the saga as evidence of why decentralized finance platforms are so desperately needed. House Financial Services Committee member Alexandria Ocasio-Cortez tweeted:
“This is unacceptable. 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.”
Elon Musk replied to her tweet, adding: “Absolutely.”
The drama appears to have benefitted the crypto markets. Bitcoin hit $34,320.91 before retracing to $32,000 — and at the time of writing, it was up 2.73% in 24 hours. Ethereum was up by a more modest 0.58% to hit $1,300, while XRP surged 7.15% to $0.27.
All of this could be linked to greater levels of transparency in the crypto markets, and the fact that retail and institutional investors are on a more level playing field when it comes to BTC.
Are we seeing the rise of Main Street vs Wall Street? Or is it Reddit vs Robinhood? Or perhaps Reddit vs hedge funds? We might be watching the beginnings of all three. We’ll keep you informed.