WallStreetBets have filed a class action suit against Citadel linked exchange Robinhood for restricting $GME purchases to crash stock.
GameStop ($GME) stock prices reached 500USD last Thursday before restricted transactions to closing only forcing the stock to plummet. WallStreetBets investors are accusing RobinGood exchange app of manipulating the market and are pushing for a class action lawsuit.
History was made last week when a keen eyed member of the WallStreetBets subreddit known as DeepF*ckingValue noticed that GameStock stock was being shorted to hell. So much, in fact, that more than 100% of the available stocks had been shorted.
A thread on Twitter explained that an investment management company, Melvin Capital, had shorted a lot of stock. That’s essentially when a hedge fund borrows stock from a broker with the plan to sell it high then buy it back at a lower cost to turn a quick profit. Short selling is literally betting against a company to fail.
When WallStreetBets caught wind of this they forced a Short Squeeze. They bought up all the stocks they could which inflated the value the stock which, in turn, would force the hedge fund to buy back at a loss jacking the price of the stock up even further and, in away, creating an infinite money glitch.
GameStop stock prices went all the way up to USD$500 last Thursday and they were going up at such a rapid rate that people predicted that it could go up to at USD$10,000 by Monday. Sadly, the value tanked and it was entirely RobinHood’s fault.
The second the $GME prices hit USD$500 Robinhood restricted people from buying more stock which made the value plummet all the way to USD$130 by Thursday night. It made a small recover and closed at USD$320 on Friday evening.
Now the subreddit with 7.5 million users is leading a charge against RobinHood and the exchange app is quaking in their boots.
The lawsuit, filed in the Southern District of New York, claims that RobinHood’s actions rigged the market against its customers.
“Robinhood’s actions were done purposefully and knowingly to manipulate the market for the benefit of people and financial institutions who were not RobinHood’s customers,” the lawsuit states. RobinHood did not respond to a request for comment. The company imposed the stock-trading restrictions Thursday citing “recent volatility.” The company said in a blog post it will only allow users to close out their positions in those stocks, which include GameStop ($GME), AMC ($AMC), Bed Bath & Beyond ($BBBY), and Nokia ($NOK).
Graham Stephan, a 30-year-old real estate agent and investor turned millionaire YouTube, made a video showing how Robinhood was largely connected to Citadel and Melvin Capital, the two companies who lost the most after the short squeeze. The information had a lot of people worried that Robinhood was doing their best to help their own investors by restricting sales.
A lot of people are now talking about Kraken, especially when it comes to buying/selling cryptocurrency. Thousands of people doubled their many investing in DOGE coin (DOGECOIN) this weekend, and Kraken is one of only two apps that support that currency. Creating an account with Kraken is easy and free and they also have the lowest rates out there right now.
Thousands of people have joined the class action lawsuit Robinhood and now there’s a separate subreddit for who people who are looking at joining the suit. The subreddit r/ClassActionRobinHood now has close to 50,000 members.