Robinhood is facing dozens of lawsuits over GameStop stock freeze


Photo by Sean Hollister / The Verge

Stock trading app Robinhood is facing dozens of lawsuits after the company restricted several stocks popular on the r/WallStreetBets subreddit. At least 30 parties across 10 states have sued the company in federal court, many seeking class action status. They allege that Robinhood users lost millions of dollars because they were unable to buy or sell stock during the freeze, and that the company chose to “manipulate the market” to help other financial institutions.

Robinhood, which bills itself as a democratizing force in the stock market, helped facilitate an unprecedented boom around a handful of “meme stocks” last month. But on January 28th, it infuriated users by freezing trades on several of these stocks. That included GameStop…

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When a group of Redditors rallied together to buy up beleaguered GameStop and AMC stocks, they sent each company soaring against all market expectations. AMC in particular was able to wipe away $700 million in debt, rescuing the movie chain from certain bankruptcy. While many of the other gains may be short-lived, there’s no doubt history was made in a meme-fueled collective investment maneuver that will be studied and debated for years to come.Read Full Story

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