Robinhood Suspends Stock Trading Due to ‘Volatility’

Popular stockbroker Robinhood has stated on its platform that the buying of several stocks, including GameStop (GME), Nokia (NOK), and AMC Entertainment (AMC), among others, will not be tradable due to market volatility. 

Robinhood goes on to explain that “we are restricting transactions for certain securities to position closing only.” 

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Robinhood Robs the Hood

Several other stockbrokers have taken similar stances to halt trading. The move has received backlash from the Wall Street Bets and cryptocurrency community. 

The unprecedented move received negative applause from several key members of the cryptocurrency fraternity. Gemini co-founders Cameron and Tyler Winkelvoss also had something to say.

Wall Street Bets does to the suits what the suits have been doing to main street for a century. Then one call to Reddit, one call to Discord, one call to Robinhood…

It there anyone out there who still doesn't think the system is rigged against the little guys?

— Tyler Winklevoss (@tyler) January 28, 2021

Wall Street Bets was putting their gammatine in place for the open. And then Robinhood decided to steal from the poor and give to the rich. #DeFi the system.

— Cameron Winklevoss (@cameron) January 28, 2021

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Monero founder Riccardo Spagni also commented on the news. Spagni stated that:

“retail is destroying the underlying assumptions made by institutional investors, so now the trade platforms are trying to prevent retail from trading.”

This is hilarious – retail is destroying the underlying assumptions made by institutional investors, so now the trade platforms are trying to prevent retail from trading.

& the *full* @chamath interview on CNBC (that CNBC are trying to take down with DMCA take downs) is perfect. https://t.co/JR3AxKksFd

— Riccardo Spagni (@fluffypony) January 28, 2021

Public Outcry

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The news has seen traders across the stock and cryptocurrency markets call foul play. The decision to halt trading is not something a broker does on a whim. 

This week has been a remarkable week for the stock market. Small stocks have seen dramatic price increases. None so much as the American video game, consumer electronics, and gaming merchandise retailer GameStop (GME). 

GameStop’s share price has risen by 2,000% since the beginning of January. All thanks to a previously little-known Reddit group called Wall Street Bets. The group of forum members has caused a surge in GME, squeezing short-sellers of the stock.

In doing so, they inflicted losses on investment management firms. One particular firm, Melvin Capital, took huge losses on the stock. Pundits believe Melvin had the biggest short position on GME. 

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Melvin Capital exited its short position earlier this week. But that hasn’t stopped the momentous climb. GME reached over $400 before the suspended trading announcement. 

No Paused Trading On Binance

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The move reiterates the importance of decentralization within the markets. Binance CEO Changpeng Zhao reiterated that Binance “won’t be able to ban it or pause trading” following a similar surge in dogecoin price action.

WallStreetBets already in #crypto? in $DOGE now?

HIGH risk WARNING.
HIGH volatility WARNING.

We won't be able to ban it or pause trading. Too many other exchanges trading it. Will just cause more problems.

Please do exercise extreme caution. Stay #SAFU. https://t.co/wTIum1BaFY

— CZ 🔶 BNB (@cz_binance) January 28, 2021

The meme digital asset is available on Robinhood. Perhaps this is one of the reasons the memecoin has become so popular.