The cryptocurrency and stock trading platform Robinhood will reportedly face accusations of market manipulation as part of a class action lawsuit filed by investors in “meme shares” of nine different companies during a January 2021 rally.
According to a Thursday report from Reuters, US District Court Judge Cecilia Altonaga of the Southern District of Florida ruled that investors in GameStop, AMC and seven other unnamed stocks – which could include Nokia and BlackBerry – could move forward with a lawsuit in which Robinhood is alleged to have artificially increased the stock offering. In January 2021, the price of various assets, including the meme token Dogecoin (DOGE), rose to all-time highs after redditors on r/Wallstreetbets boosted interest in certain stocks and cryptocurrencies.
Robinhood suspended — but later resumed — purchases of GME shares and others following the exponential rise in assets, putting the trading platform in the middle of a fight between retail investors and large hedge funds shorting the actions. Thousands of users left one-star reviews for the Robinhood app on the Google Play Store, the platform put plans for a U.S. IPO on hold, and individuals filed several class-action lawsuits alleging that Robinhood was playing to the interests of hedge funds involved, given their ties to Citadel and Melvin Capital.
Today is the day that Robinhood stole from the poor to give to the rich. $GME $KOSS
— Betting Bruiser (@BettingBruiser) January 28, 2021
Following the controversy over the actions of the memes, Robinhood was at times targeted by US lawmakers looking for answers. CEO Vlad Tenev testified before a House Financial Services Committee hearing in February 2021. Unrelated to the developments surrounding the meme shares, the New York Department of Financial Services also announced on August 2 that Robinhood Crypto will pay a $30 million fine to the state “for significant failures in the areas of Bank Secrecy Act/Anti-Money Laundering Obligations.”
Following the release of Robinhood’s financial results for the second quarter of 2022, Tenev said he planned to lay off 23% of the firm’s staff, saying April’s cut of the workforce by 9% did not “go far enough” to help the trading platform. At press time, HOOD shares are trading at $10.59, having risen more than 26% in the last 30 days.
Cointelegraph reached out to Robinhood but did not receive a response at the time of publishing this story.
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