A thread: @RobinhoodApp has never been good. Over the last two years alone we've seen multiple failures by the company - this recent $GME issue is the tip of the Iceberg. Going to outline one of those failures below:

The Robinhood Infinite Money Glitch: Maybe a year or two ago, a Reddit user discovered a way to get infinite margin (loans) from the Robin Hood app using a combination of Robinhood Gold to buy stock, and their options platform. He wound up losing $50k of loaned money on $2k cash.

Basically what he did was sign up for Robinhood Gold, which at the time gave him 2-1 margin. So Robinhood would essentially double his buying power via margin (a loan) for the cash he had in his account. He started with $2000, and bought 100 shares of stock.

With that 100 shares, he sold a covered call option, in which he's paid money to agree to sell his shares to someone at a price if the stock price exceeds that set dollar limit. He now takes his initial investment, the money he earned from the option, and the money he earned from

selling the stock and goes back to Robinhood gold and increases his margin with that money. Robinhood can't tell the difference between his original $2k cash investment, and the money they loaned him, and so he once again doubles his buying power via margin (loan) and repeats.

So this kid get himself up to $50k worth of buying power, and made a bet against Apple the day before earnings. Apple crushed it and the stock soared, and he lost ALL of the money that he laundered through the app. There is actual video of the moment.

Obviously he knew what he was doing and it was his fault, but the fact that Robinhood allowed some kid to get 25x leverage with an initial investment of $2,000 is uhhh, not great. There are at least three or four more stories of Robinhood being plain negligent that I can share.