Robinhood Didn't Want To 'Stop People From Buying These Stocks'

Robinhood has been the center of attention since last week after a Reddit thread caused the uproar of purchases of GameStop stock from small investors, which has caused the app to finally release a statement about what’s been happening.

The free stock platform halted the buying of GameStop, as well as a handful of other stocks, to many app users, which caused the loss of the money the small investors originally pumped into these companies.

The Reddit group/community called Wall Street Bets, which has six million members, got the inside scoop on the Melvin Capital hedge fund’s shortened stock, which in turn meant the stock was going to be decreasing significantly, according to Yahoo News.

The US Securities and Exchange Commission (SEC) described this movement as one that would make large, wealthy, hedge funds suffer tremendously.

“It was not because we wanted to stop people from buying these stocks,” Robinhood said in a blog post published late Friday after the ability to purchase was restored.

“We did this because the required amount we had to deposit with the clearinghouse was so large — with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements — that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” the app continued.

Many users were unhappy with the actions of Robinhood and felt betrayed after the availability to buy was suddenly unavailable if you didn’t have a stock-trader license.

GameStop alone surged over 400% over the past week, according to CNBC.

The app ended its statement saying, Rest assured, our position remains firm—we stand with our customers and will continue to provide you with the resources and tools you need to become a confident, informed investor.”