Following the suspension of trading on the broker platform Robinhood, a US lawmaker has requested an official investigation into the WallStreetBets debacle.
Congress member Paul A. Gosar recently submitted a petition to the U.S. Department of Justice following the Robinhood app drama. Gosar said he was “greatly troubled” and called for an immediate investigation.
Volatility Claims Surrounding Robinhood
Gosar claims that Robinhood’s actions were unlawful. Gosar’s letter follows the recent short squeeze between the Subreddit WallStreetBets and the investment firm Melvin Capital Management.
Melvin Capital had placed a massive short sell on the ailing game retailer GameStop (GME). Redditors counteracted this by buying up GME on the free broker app Robinhood.
Paul explained that Citadel LLC, the parent company of Melvin Capital Management had a conflict of interest with Robinhood:
“Melvin Capital is owned by the parent company “Citadel, LLC” which, according to a Bloomberg report, gave Robinhood roughly 40% of their revenue. Knowing the involvement Citadel has with Robinhood, it is clear that the actions taken today were motivated by anti-competitive reasons, not for concerns of volatility claimed by Robinhood.”
Mainstreet over Wall Street
Trading activities on Robinhood appear to have been spurred by strong sentiments from the crypto community. Crypto influencer, Anthony Pompliano, also known as Pomp, explained this in one of his recent podcasts. In his latest audio, dubbed “The game has changed,” Pomp explains Wall Street’s emerging paradigm shift.
Pomp frowned at hedge funds and banks, accusing them of making profits at the expense of the “little guy.” He describes these actions as disdainful, blaming Wall Street market participants of exploitation.
Pompliano highlighted the 2008 housing crisis, naked short selling, and hedge funds front running trades as activities that hurt smaller investors. Accordingly, he believes this serves as the best marketing for the emergence of decentralized finance instead of a rigged existing financial system.
Reddit co-founder Alexis Ohanian reinforced this sentiment among crypto enthusiasts. For some, this was simply warfare against the big shots on Wall Street.
Ohanian pointed to a Redditor who suffered during the 2008 recession, which saw a massive transfer of wealth from the poor to the rich. This Reddit user may have finally received some justice after Melvin Capital suffered massive losses.