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Capital Markets


#311
The 'Unlimited Money' Cheat Code

Published:

Nov 09, 2019


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Posted In:

Capital Markets

Published:

Nov 09, 2019


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Robinhood was living up to its name this week – inadvertently giving money back to the people!

Some Robinhood Gold users took advantage of a glitch that saw one trader turn a $3k deposit into a $1.7m position through unlimited leverage. The glitch involved a trade that incorrectly added the full value of sold “super charged” options to the user’s cash pile, giving them more buying power.

Audacious users were able to repeat this trade with no limit, which spurred Reddit users to call this the “unlimited money" cheat code. In the end, only 20 cheeky users were able to pull off the trades, and it is estimated to have cost Robinhood less than $100k - a blip considering the fintech has raised more than $500m in venture funding.

But the real blowback for Robinhood might be in Washington D.C. This lapse will not look good in front of the SEC or FINRA as Robinhood is seeking a bank charter. This comes on the heels of another regulatory mishap when Robinhood falsely claimed their checking accounts where SIPC-insured.

Other fintech companies who are just adding brokerage capabilities are surely keeping an eye out to avoid the money cheat code – with Square’s Cash App adding zero-fee trading and fractional stock investing.

The traders could be in legal trouble too – with a Georgetown law professor saying that this could become a securities fraud case, with users needing to pay back all borrowed cash.

So it seems the old adage holds – money doesn’t grow on trees!

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The 'Unlimited Money' Cheat Code


Robinhood glitch lets traders borrow unlimited funds to buy stocks - The mobile trading app that has more than 6m users is contending with a glitch in its platform that enabled some traders to "supercharge" their trades with unlimited borrowed money. Read more

Industry News


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