The large trading platform Robinhood, which offers both stocks and cryptocurrencies, is facing the accusation of market manipulation, which has now been brought by several investors as part of a class action.
As Reuters reported yesterday, a court in the US state of Florida has now ruled that the class action will be admitted. This refers to the “meme stocks” of the companies GameStop, AMC and seven other companies in difficulty, which were selected by users of the social network to ensure price increases through joint demand. In the course of this, the cryptocurrency Dogecoin (DOGE) was also raised to a new record high.
At that time, Robinhood had temporarily stopped trading in the relevant “joke shares”, because the price increases achieved had resulted in a so-called “short squeeze”, which resulted in considerable losses for several large hedge funds. The temporary trading halt was therefore seen by many observers as a knee-jerk reaction to high finance, while the small investors, who actually make up the main customer base of Robinhood, in turn had to accept losses as a result. The reason for this is the platform’s connections to the affected financial service providers Citadel and Melvin Capital.
Today is the day that Robinhood stole from the poor to give to the rich. $GME $KOSS
– Betting Bruiser (@BettingBruiser) January 28, 2021
The case caused a real controversy in American politics, after which Robinhood BOSS Vlad Tenev was even summoned before a parliamentary investigative committee in February 2021.