American trading company Robinhood has been accused of market manipulation by the US court, as ruled yesterday, 12 August, following events surrounding the Gamestop case of 2021.
The platform should not have blocked trading during the period of the so-called “meme stock rally” in January 2021, the one caused by the Reddit group WallStreetBets.
Miami court judge Cecilia Altonaga responded to a class action lawsuit by investors and accused the platform of failing to serve the interests of users and manipulating the market, particularly with regard to the stocks of GameStop Corp (GME.N), AMC Entertainment Holdings Inc (AMC.N) and others.
What happened on Robinhood in 2021
Robinhood had decided to shut down its trading app due to severe market manipulation that occurred in January 2021, and this sparked contention between investors and the American company.
In a period of high volatility, in large part caused by uncertainty for the economy that had been severely tested by the pandemic and in part by the manipulations of the Reddit group WallStreetBets that had decided to pump up GameStop’s stock, the platform had chosen to block the operation of its app.
The consequence of this decision was criticized by all investors who were inhibited from managing their portfolios and therefore organized a class action lawsuit against Robinhood.
The move adopted by the exchange had caused huge losses in value and opportunity to investors who were back on the battlefield.
Back in 2020, Robinhood also had problems with the SEC for misleading customers about sources of revenue and failing to meet its obligation to improve platform execution. As a result, the company had to pay as much as $65 million.
In the hope that the company knows 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 problems it had with the LUNA token, or even Three Arrow Capital.
The crypto market, however, at least in terms of volume and value seems to have entered a broad-based relief rally or perhaps a reversal that in any case has brought Bitcoin back to testing $24,000.