News

We got a leaked copy of the memo Robinhood sent to banned users who exploited its now-infamous ‘infinite money’ glitch


wolf of wall street

Robinhood restricted the accounts of users exploiting an “infinite leverage” glitch, and a leaked letter details how the company alerted participating traders.
The company confirmed the notice is legitimate, but could not comment on whether all users received the same letter.
The notice details three options the trader can use to liquidate assets, and says any “negative equity balances” must be repaid within 60 days.
Click here for more BI Prime stories.

Robinhood restricted the accounts of users exploiting an “infinite leverage” glitch, and a leaked letter sent to one terminated trader reveals how the company announced account terminations.

A Robinhood spokesperson confirmed the notice is legitimate, but could not comment on whether all users received the same letter.

The letter details three options the user can use to liquidate their accounts. The trader is advised to either (1) make an Automated Customer Account Transfer from another brokerage service, (2) request an automated clearing house transfer to a bank connected to their Robinhood account, or (3) request a written check to an address on file.

The notice adds that the user’s account is limited to position-closing trades only. Traders with “negative equity balances” are to satisfy the debts before their account closes in 60 days.

Read the full letter below. Personal details are redacted:

The hack was first discovered by members of the WallStreetBets sub-reddit after one trader turned a $2,000 deposit into a $50,000 position. The trade involves users selling call options with money borrowed through Robinhood Gold. The app then incorrectly added the value of the sold options to users’ cash pile, allowing them to repeat the trade with no clear limits.

A Robinhood spokesperson said on Thursday the company closed the loophole and implemented a “permanent update” meant to “prevent anyone from engaging in this pattern of trades.

“We’ll continue to monitor closely for any type of abusive activity on our platform and will take action as appropriate,” the spokesperson said.

Now read more markets coverage from Markets Insider and Business Insider:

Wall Street’s ‘Charging Bull’ statue will be relocated after drawing protests for years

China is reportedly considering a $10 billion investment in Saudi Aramco’s record-shattering IPO

Hewlett Packard Enterprise explains why it gave up on quantum computing right as it was splitting off from HP Inc

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the ‘3rd wave’ firms that are leading the next round of tech disruption

…read more

Source:: Business Insider

      

(Visited 28 times, 1 visits today)

Leave a Reply

Your email address will not be published. Required fields are marked *