ADVERTISEMENT

Robinhood to face class action lawsuit from meme stock debacle: Report



Cryptocurrency and stock trading platform Robinhood will supposedly face claims of market adjustment as part of a class-action lawsuit brought by financiers in “meme stocks” from 9 various business throughout a January 2021 rally.

According to a Thursday report from Reuters, United States District Court Judge Cecilia Altonaga of the Southern District of Florida ruled that financiers in GameStop, AMC and 7 other unnamed stocks — which might consist of Nokia and BlackBerry — might continue with a lawsuit declaring that Robinhood synthetically increased the supply of stocks. In January 2021, the cost of a number of possessions, consisting of the meme token Dogecoin (DOGE), increased to all-time highs after Redditors on r/Wallstreetbets pumped up interest in particular stocks and cryptocurrencies.

Robinhood suspended — however later on resumed — purchases of GME stock and others following the possessions increasing significantly, putting the trading platform in the middle of a battle in between retail financiers and big hedge funds shorting stocks. Thousands of users left one-star evaluations for Robinhood’s app on the Google Play Store, the platform put its prepare for a going public in the U.S. on hold and people submitted a number of class-action suits declaring Robinhood was kowtowing to the interests of the included hedge funds, provided its ties to Citadel and Melvin Capital.

Following the meme stock debate, Robinhood was often the target of U.S. legislators trying to find responses. CEO Vlad Tenev affirmed prior to a House Financial Services Committee hearing in February 2021. Unrelated to the occasions around meme stocks, the New York Department of Financial Services likewise revealed on Aug. 2 that Robinhood Crypto will pay a $30 million charge to the state “for significant failures in the areas of Bank Secrecy Act/Anti-Money Laundering obligations.”

Related: Robinhood gets British crypto company Ziglu to push growth strategies

Following the release of Robinhood’s monetary outcomes for the 2nd quarter of 2022, Tenev stated he prepared to lay off 23% of personnel at the company, stating cutting the labor force down by 9% in April didn’t “go far enough” to assist the trading platform. At the time of publication, shares of HOOD are trading for $10.59, having actually increased by more than 26% in the last thirty days.

Cointelegraph connected to Robinhood, however did not get a reaction at the time of publication