Reddit Calls For Lawsuit Against Robinhood After It Blocks GameStop Share Purchases
Reddit users are calling for a class action against trading platform Robinhood after it restricted its users from buying or trading any GameStop, AMC and Blackberry stocks.
‘Allowing people to only sell is the definition of market manipulation. A class action must be started, Robinhood has made plenty of money off selling info about our trades to the hedge funds to be able to pay out a little for causing people to lose money now,’ wrote Reddit user does-it-mater.
They went on to suggest that everyone should open another account up on a trading site that isn’t Robinhood.
CLASS ACTION AGAINST ROBINHOOD. Allowing people to only sell is the definition of market manipulation. A class action must be started, Robinhood has made plenty of money off selling info about our trades to the hedge funds to be able to pay out a little for causing people to loose money now from r/wallstreetbets
‘It might take a couple of days to be able to use but I think it’s pretty clear that as most of us aren’t billionaires in hedge funds,’ they added.
‘Robinhood doesn’t have our back, and has no problem seeing the working class lose millions because of their doing. Put them out of business, they don’t deserve it.’
Another Reddit user responded, ‘The f*cking audacity to call yourself Robinhood and instead steal from the poor.’
Robinhood users can still close out existing positions, but they can no longer purchase anymore GameStop stocks as a result of the ‘recent volatility’ in the market.
In a statement, the company explained:
We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.
It all comes after a group of Reddit users decided to show a middle finger to Melvin Capital, which had started short-selling its shares of GameStop – known as GME on the market – after ongoing financial struggles caused by the pandemic.
To put it simply, Melvin Capital was set to gain if GameStop’s value went down and lose if it went up, which is where a group of Reddit users decided to step in.
Members of the wallstreetbets forum began to buy up GameStop stocks en masse, meaning as demand grew, the price went up and up.
Since the Reddit vs hedge fund war began around two weeks ago, short-sellers are reported to have lost an estimated $70 billion, proving you should never underestimate the power of the internet.
If it’s still a little confusing – because trust me, it is – you can read our full explainer here.
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