A lot of people, me included, are justifiably angry at Robinhood, Stash, and Webull for halting trading. However, what's actually going on behind the scenes goes much deeper. (Thread) (1/x)

These firms are all underwritten by behemoth institutions known as "clearing firms." These firms handle all the back-end transactions for Robinhood and other apps, since Robinhood itself as a small startup doesn't have the authority to guarantee transactions on its own. (2/x)

Because these firms handle all actual transfers of securities (stocks/ETFs/options) they keep the authority to cancel or alter the rules in order to "protect" their assets. The apps themselves can't just say no, because the clearing firm could refuse to handle future transactions

Robinhood is backed by Citadel, which itself is a hedge fund whose owner holds a stake in Melvin Capital, the other fund that Reddit specifically targeted because of how heavily they bet on Gamestop and these other companies going under. (4/x)

So you have a situation now where Citadel and other clearing firms are losing their marbles because they stand to lose a ton of money in all their accounts they chose to short. (5/x)

Because a lot of them own or are directly involved with the apps themselves, they hold an enormous position of leverage over trading. So they tried to influence the market positions of the stocks they stand to lose money on by barring the little guy from buying more shares. (6/x)

This is all a coordinated effort to drive down the share price so that they don't lost *AS MUCH* money as they would if we, say, sent $GME and $BB and $NOK and $AMC to the moon immediately and began a short squeeze where they would have to buy these securities themselves. (7/x)

This is about giving them a buffer and letting them exit quietly while the share price is low. If they're lucky, maybe they won't have to exit their position with their shorted shares at all and keep all their money. This is about maintaining control of the market. (8/x)

They want to send a message that it's *theirs*. That if we do anything to improve our own standing which might hurt theirs, they'll fight back.

As you may already have noticed, this is not free market behavior. Not even close. (9/x)

The owner of Citadel, Ken Griffin, is worth 45 BILLION dollars and owns the most expensive single-unit condo in Manhattan.

And despite being so wealthy, he's still trying to shut out retail investors. There's really no other word I can use to describe this behavior besides evil.