Context: traders (aka self proclaimed autists in /r/wallstreetbets) found a way to exploit Robinhood for infinite leverage. As a result, millions have been leveraged on thousands of dollars of actual assets. Are staff at Robinhood freaking out?
Robinhood is currently in the middle of an SEC investigation FYI
Robinhood is fine. The people who are taking advantage of this are the ones who should be freaking out, they are committing securities fraud
Robinhood broke federal regulations in how they issued/allowed margin - odds are slim that anyone who lost $$$ will actually end up paying RH back
I imagine the people making a killing at it are fully ready to get out of US jurisdiction when shit goes south.
That’s not how it works, it’s still fraud lol
Honestly, I’m more concerned that their “fix” is a total kludge when the real fix is simply updating a formula. It makes me wonder WTF kind of tech debt they got going on under the hood that the kuldge was really the best short term path
Uhhh because they literally give you free money. Have you not been paying attention bruh. Can't go tits up
It looks like it was only a few small loans. Robinhood has billions. No big deal. They should be much more worried about how this effects their insurance premiums.
Based on screenshots, it looks like at least 10m was leveraged, which is 1% of their money raised ($912M). Unknown is how many others exploited it, but didn't post on reddit. 1% isn't big, but it's not insignificant. Especially when considering the SEC is likely going to be investigating. Plus, what competent investor feels comfortable with Robinhood now? Granted, most probably didn't in the first place.
They closed out most of the large margin positions before the IV was crushed so they would only have lost a small percentage of 10mm which is like nothing for them