![]() ![]() Using Robinhood to conduct trades, due to its policy of fee-free trading, users on Reddit were able to vault GameStop stock up more than 14,300% last week, which later free-fell back down again to $53.50 after Robinhood restricted users from buying certain stocks on its platform. Robinhood first catapulted to headlines with the rise and fall of GameStop stock, which had its price and value manipulated by a group of Reddit users. Robinhood Controversy Related to GameStop Stock Specifically, Robinhood has found itself embroiled in controversies that involve the premature cessation of GameStop stock trading as well as a wrongful death filed against it. ![]() In this post, we discuss the current controversies that surround the trading app. ![]() In a previous blog post, we briefly discussed Robinhood’s background and how its entry into the trading section affected its competitors. In 2019, a Chinese Bitcoin trader killed himself after losing 2,000 Bitcoins in a highly leveraged trade position, according to Yahoo! Finance.The Robinhood Controversies: Congress Scrutinizing GameStop Trading and Wrongful Death Lawsuit Filed In 2017, the National Post reported that a man committed suicide after losing over $300,000 in binary option trading. Stories of people committing suicide after losing money are not always publicized, which is why the real number of people who kill themselves after running up massive losses is not known. In a statement to Business Insider, a Robinhood spokesperson said the company was “ devastated by Alex Kearns’ death.” The spokesperson said that the company had made several improvements to its customer service and other functions since Kearns’ death. “ That could panic just about anybody,” Blakeman said. The family’s attorney, Benjamin Blakeman, told CBS News that Robinhood made it look like Kearns owed the app $730,000 when he actually didn’t owe anything. The day after his death, Robinhood notified Kearns of lifting his trade restrictions because he’d met his margin call. The parents say the investment app “must be held accountable” for Kearns’ death because its customer service failed to answer their son’s questions. Robinhood sent Kearns an automated message notifying him that the company was “working to get back” to him. Could someone please look into this?” Kearns wrote. “ My bought puts should have covered the puts I sold. The young trader wrote in the email that he was “ incorrectly assigned more money than I should have.” The Kearns family is accusing Robinhood of wrongful death, arguing that the stock-trading app failed to offer “ meaningful customer support” to their son, who was desperate to find answers to his questions.Īfter seeing the negative cash balance, Kearns contacted Robinhood’s customer service to understand why he had accrued the massive debt. In their lawsuit against Robinhood, Kearns’ parents say they believe the app’s response to his questions about the apparent loss of $730,000 contributed to his suicide. In a suicide note to his parents, Kearns wrote about having “ almost $1 million worth of leverage” and that he had “ no clue” what went wrong. On the day Kearns committed suicide, his account on Robinhood had been restricted and showed a negative cash balance of $730,000. Dan and Dorothy Kearns filed a wrongful death lawsuit against the investing app, according to CBS News. The family of Alexander Kearns says that Robinhood is partly to blame for their 20-year-old son’s death. THE wrongful death lawsuit against Robinhood Critics say that millions of young traders are lured into buying and selling stocks on Robinhood by the prospect of making big money. The stock-trading app has been particularly popular among young individuals with no experience in investing and stocks. It’s appealing to users because it allows them to invest more than they have without having to use financial brokers or charging commissions. Robinhood has dominated app store rankings since the beginning of the COVID-19 pandemic in early 2020. ![]()
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