Robinhood, Reddit CEOs Testify In Gamestop Hearings

Key Takeaways

  • The U.S. House Financial Services Committee held a hearing concerning Robinhood and Gamestop today.
  • Last month saw massive shortselling of Gamestop’s corporate stock (GME) coordinated on social media.
  • The CEOs of Reddit and Gamestop testified today, along with independent trader Keith Gill.

The U.S. House Financial Services Committee held a hearing today in order to question those involved in the mass short selling surrounding Gamestop (GME) stocks last month.

Reddit CEO Says Activity Was Legitimate

In January, social media users on Reddit communities such as WallStreetBets coordinated their trading activity to purchase and short Gamestop (GME) en masse to make profits.

During the hearing, Reddit CEO Steve Huffman insisted that WallStreetBets hosted legitimate activity, and that the activity that surrounded the campaign was natural. “With the increase in attention, WallStreetBets unsurprisingly faced a surge in traffic and new users,” Huffman noted in a prepared statement.

He added that Reddit analyzed that activity and determined that bots and foreign agents did not play any significant role, and concluded that the community acted within the “within the bounds” of site policy.

Gill Says He Did Not Influence Markets

Independent trader Keith Gill (“Roaring Kitty”) also testified.

Gill was responsible for attracting early attention to Gamestop stocks in 2019 through Reddit and YouTube after observing that the stock was undervalued. He insisted that he did not solicit others to buy GME, and that he only had access to public information.

Gill added that he shared his investment views on social media in order to educate others and accept criticism. “The idea that I used social media to promote GameStop stock to unwitting investors is preposterous,” Gill concluded, drawing attention to his low attention and viewership rates at the end of 2020.

Robinhood CEO Comments

Last month, Robinhood responded to the mass activity around Gamestop by restricting the trading activity of its users.

During today’s hearing, CEO Vlad Tenev declared that Robinhood’s decision to restrict user activity was a response to rapidly rising collateral and deposit requirements. He denied that this was done in response to pressure from hedge funds, as some had speculated.

“Robinhood Securities put the restrictions in place in an effort to meet increased regulatory deposit requirements — not to help hedge funds. We don’t answer to hedge funds,” Tenev stated.

Tenev sympathized with investors frustrated about Robinhood’s policy decision, but implied other courses of action would have been far worse. “We don’t want to impose that type of experience on our customers unless we have no other choice,” he stated.

Fallout Is Unclear

The events surrounding the Gamestop controversy have now been in progress for several weeks. Hearings today show that regulators are willing to scrutinize Robinhood; however it is still not clear what actions will ultimately be taken against the firm, if any.

The news is particularly relevant to the cryptocurrency sector because similar events occurred around Dogecoin, forcing Robinhood to restrict trading around the cryptocurrency. Today’s hearing did not address the cryptocurrency, though Robinhood’s ability to suspend trading is relevant to crypto investors and stock traders alike.

In related news, Robinhood has revealed plans to introduce cryptocurrency deposits and withdrawals, addressing a long standing complaint about its restrictive cryptocurrency policies.

At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.

Source: Read Full Article