The American trading company Robinhood was accused of market manipulation by a US court yesterday, August 12, following the events surrounding the 2021 Gamestop case.
The platform should not have prohibited trading during the January 2021 “meme stock rally” caused by the Reddit group WallStreetBets. In response to a class action lawsuit filed by investors, Miami court judge Cecilia Altonaga accused the platform of failing to serve the interests of users and manipulating the market, particularly about the stocks of GameStop Corp (GME.N), AMC Entertainment Holdings Inc (AMC.N), and others.
What happened in 2021 with Robinhood?
Due to severe market manipulation in January 2021, Robinhood decided to shut down its trading app, causing conflict between investors and the American company. In a period of high volatility, the platform chose to block the operation of its app, in part due to uncertainty for the economy, which the pandemic had severely tested, and in part due to manipulations by the Reddit group WallStreetBets, which had decided to pump up GameStop’s stock.
As a result of this decision, all investors prevented from managing their portfolios organized a class action lawsuit against Robinhood.
Robinhood also had issues with the SEC in 2020 for misleading customers about revenue sources and failing to meet its obligation to improve platform execution. As a result, the company was forced to pay up to $65 million.
In the hope that the company understands what it is doing, this is a major reputational blow for the entire cryptocurrency industry, joining the recent operational freezes of other platforms such as Binance or the issues it had with the LUNA token, or even Three Arrow Capital.
The crypto market, on the other hand, appears to have entered a broad-based relief rally, or perhaps a reversal, which has brought Bitcoin back to testing $24,000.