{"id":165472,"date":"2021-01-29T00:57:55","date_gmt":"2021-01-28T21:57:55","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/financial-ties-between-robinhood-and-funds-shorting-gme-fall-under-scrutiny\/"},"modified":"2021-01-29T00:57:55","modified_gmt":"2021-01-28T21:57:55","slug":"financial-ties-between-robinhood-and-funds-shorting-gme-fall-under-scrutiny","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/financial-ties-between-robinhood-and-funds-shorting-gme-fall-under-scrutiny\/","title":{"rendered":"# Financial ties between Robinhood and funds shorting GME fall under scrutiny"},"content":{"rendered":"

“# Financial ties between Robinhood and funds shorting GME fall under scrutiny <\/strong>”
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The connections between trading app<\/a> Robinhood, Citadel hedge fund, Melvin Capital, and Game<\/a>Stop are becoming clearer as the Internet burns with outrage over allegations of market manipulation.<\/p>\n

Melvin Capital was one of the biggest players short-selling GameStop stock, or GME. When a number of Reddit<\/a>ors \u2014 and gamers \u2014 on the r\/Wallstreetbets subreddit pushed back against institutions trying to financially destroy the popular brick and mortar video game store, the price of GameStop shares shot up. This effectively turned the tables on Melvin and left the firm vulnerable, with its investors likely to lose billions. <\/p>\n

However, Citadel and Point72 Asset Management came<\/a> to the investment firm\u2019s rescue on Monday, investing $2.75 billion in Melvin and patching the problem while the firm seemingly looked for more lasting solutions. <\/p>\n

Within a few days, Robinhood would go on to restrict trading for GME and others, effectively preventing retail investors from purchasing more shares of the stocks. While still far higher than it was earlier this month, the price of GME has halved today, dropping from $462.42 to $231.57 as of the time of publication. <\/p>\n

The fall in GME’s price would seemingly benefit Melvin at this point. However, for a trading app like Robinhood, which claims<\/a> to \u201cdemocratize finance for all,\u201d many were questioning the motivations behind the platform suddenly restricting trades for many of the stocks Redditors were pumping. <\/p>\n

According to a June report from the Financial Times, $39 million of Robinhood\u2019s revenues from equities and options order flow came<\/a> from Citadel Securities, a market maker sister firm of Citadel. At the time, this represented more than 35% of the trading platform\u2019s revenues.<\/p>\n

In summary, Citadel is one of Robinhood\u2019s biggest customers. Citadel invested in Melvin, which is potentially facing trouble because a bunch of investors from Reddit decided they didn\u2019t like a major hedge telling the market to crush GameStop. Many of the Redditors used Robinhood to buy GameStop shares. Now Robinhood has severely restricted trading for GameStop. <\/p>\n

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Citadel is an investor in Melvin Capital, which got run over by Wall Street Bets. Citadel is also Robinhood’s biggest customer. <\/p>\n

\u2014 Tyler Winklevoss (@tyler) January 28, 2021<\/a><\/p><\/blockquote>\n