3 US watchdogs are probing Robinhood’s actions over the GameStop craze including the SEC, the FINRA, and the New York Attorney General’s office which are all making inquiries as we are reading more in today’s cryptocurrency news.
Robinhood is a well-known app for trading options, gold, stocks, crypto and said that it fielding inquiries from 3 US Watchdogs over the trading halts and other issues. According to a Reuters report, the company said back on Friday that it’s in settlement talks with the Financial Industry Regulatory Authority over the curbs of trading of certain stocks as well as policies on options trading.
Robinhood was also contacted by the US Securities and Exchange Commission and the New York Attorney General’s office. The app put a stop to trading shares of Gamestop and other stocks like NOKIA, AMC Entertainment as later crypto, as the social-media-driven trading frenzy tried to force a squeeze on short-sellers back in January. The restrictions were lifted later with the app citing a spike in clearinghouse collateral requirements which made some of the regulators relate to hacks of the user accounts back in October.
The CEOs of Citadel, Robinhood, and Reddit testified before Congress as a part of the review of the GameStop short squeeze which was a retail-driven spike in the price of the stocks and the hearing was getting on a harsh tone. As Congress Started the hearing, most of the testimonies centered on what actually happened and why Robinhood decided to restrict certain stocks on its platform. Representative Maxine Waters who chairs the House Financial Services Committee tried to keep Ken Griffin and Vlad Tenev on track insisting that they should only be answering with “yes or no.”
The answer to the question of what happened in January remains unanswered but it seems that the general opinion is that traders on Reddit’s message board called r/WallStreetBets decided to pump the prices of the shorted companies like Nokia, AMC, and Gamestop and it worked. The price of the GME stock increased to over $300 while Melvin Capital, one of the hedge funds that shorted GameStop, had to make a $3 billion bailout from Citadel and Point72.
In a blog post published “Crypto Goes Mainstream” Robinhood revealed that it had seen six million new users on the app for trading crypto so far this year. The number of new monthly customers purchasing crypto in 2021 is 15 times the 2020 average.
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