Robinhood, the trading app went from being seen as the future of fintech platforms to Crony Capitalists apologist soon post its decision to halt Gamestop (GME) trading for retailers while allowing hedge funds to trade that led to multiple lawsuits and US Congress members calling for an investigation.
Vlad Tenev, the CEO of the trading app appeared on CNBC to explain the idea behind the decision to halt the trading of GME stocks that eventually led to a crash in its price to sub $150 levels after hitting a new ATH of above $420. Tenev during the interview said that the decision was taken to protect investors and customers.
The CEO also clarified rumors about the decision being forced by Wall Street and investors and said that there was no such pressure from anyone to halt GME trades and it came from the firm itself.
Robinhood Faces Investigation and Lawsuits
The popular trading app which was valued at nearly $11 billion not so long ago, seems to have shot itself in the foot with the decision to favor Hedge Funds over retail traders, and now face several class-action lawsuits as well as an investigation called on by Congresswoman Alexandria Ocasio-Cortez as the member of the Financial Service Committee.
A class-action lawsuit was already filed with the Southern District Court of New York yesterday with many more to come. Many believe that one decision by the company to please Wall Street has sealed its fate.
Market Manipulation or Trading Revolution
It all started with a Reddit group wallstreetbets when the founder of the group discovered a Wall Street hedge fund, Melvin Group has bought an extensive amount of short positions against Gamestop. What followed afterward has never been seen before as retailers along with social media waged a war against Wall Street pushing the hedge fund near bankruptcy and calling for pumping similar small stocks which the wall street has bet against.
The Hedge Funds and Institutional investors were miffed by this newfound way by the retailers and even called it a form of market manipulation. Nasdaq decided to halt the GME trades and similar stocks if any speculative movement is observed. However, the same Hedge Funds have been using this tactic all along, but nothing ever happened because those in power controlled the narrative.
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Source: Robinhood CEO Vlad Tenev Defends Firm Post GME Halting Backlash and Lawsuits