Robinhood Glitch Gives Traders Unrestricted Access to Borrowed Funds
A major glitch in the Robinhood app allows users to trade with massively inflated borrowed funds, with one user turning a $4,000 deposit into a $1 million position. The trading platform acknowledges the isolated incidents but does not confirm a fix.
A severe glitch in the Robinhood trading app allows users to trade stocks with far more borrowed money than their accounts actually permit. Users on Reddit's WallStreetBets forum share stories of exploiting this bug, with one trader turning a $4,000 deposit into a massive $1 million position and another accessing $50,000 in purchasing power to buy Apple puts before losing it all.
Robinhood does not appear to have a fix in place for the issue as the company only provides a brief statement acknowledging these isolated situations. A spokesperson says the company communicates directly with affected customers but fails to answer questions regarding how long the exploit remains active or how many people take advantage of the excessive borrowing power.
This malfunction adds to a history of missteps for the Menlo Park startup as it pursues its ambitious goal of becoming a full-service financial institution. The company previously faces regulatory pushback over an uninsured checking and savings account product and now navigates these new technical challenges while expanding its banking services and adding high-profile executives to its board.