A class-action lawsuit has been filed against stock trading app Robinhood amidst the fallout of the Gamestop fiasco that has unfolded over the past few months. The epic battle of wallets has caught everyone’s attention it seems, even that of the new Biden Administration. The historic stock trading occurrence has thrust the dying video game retailer into the national spotlight as the ramifications of such an event might have everlasting impacts on the state of stock trading in the U.S. as a whole.
Gamestop has seen massive success starting in and around 2004. During the emergence of the pillars in home gaming, such as Playstation and Xbox, Gamestop was able to make a killing while releasing the latest games alongside its buy/sell/trade business formula. For a decade or more, the retail store was the one-stop-shop for any gamers that lived near one. But in recent years, the company has fell on hard times as digital stores on consoles and PCs, like Steam, have made the brick and mortar game store a concept of the past. The final nail in the coffin was presumed to be the COVID-19 pandemic; that is, before the events of this past week.
An article posted by Gamerant has announced that a class-action lawsuit has been filed against the stock trading app, Robinhood. This follows the app restricting the buying and selling of Gamestop stocks after the infamous subreddit, WallStreetBets, noticed that many large investment and trust-fund firms were using a generally-known underhanded process known as short selling to profit off of Gamestop’s downfall. The subreddit noticed this and proceeded to buy hundreds of GME stock which caused the larger firms to lose billions on their own stock in the company.
The larger firms were obviously upset by this and made it known that they were not going to have it. Shortly after, Robinhood implemented trading restrictions, claiming that what had been done was a form of “market manipulation”. The popular subreddit of private and individual traders was then banned from the site itself. The subreddit was banned for supposedly being too “volatile” during this whole situation.
This story has caused a record spike in the prices of GME stock while also drawing the attention of some of the nation’s own representatives. AOC has tweeted multiple times about how amused she was to see big Wall Street fall victim to their own medicine while Republican Senator Ted Cruz agreed with her. The Biden Administration has even said that they are monitoring the situation carefully.
Robinhood’s lawsuit comes from the U.S. District Court Southern District New York and says that the company is in violation of multiple free-trade regulations. The larger firms are upset about the funds they lost by being outmaneuvered on the open stock market by a sizable group of individual buyers, whose community has gained a reputation for being a “volatile” online group. AOC is even going live on Twitch to report on the event. The battle is far from over and some analysts even believe that this might save the dying retailer GameStop from total annihilation.
