- Retail brokerage apps have suspended trading on stocks pumped by r/WallStreetBets.
- Allegedly, hedge funds have conspired with the US government to initiate this retaliation strike.
- DeFi projects see this as an opportunity to showcase the benefits of decentralization.
After the subreddit r/WallStreetBets pumped the stock price of GameStop (GME) to a gain of over 180%, as well as several other stocks, popular trading apps such as Robinhood have temporarily halted the ability to open new positions for specific assets. Discord has also banned r/WallStreetBets and the subreddit was temporarily closed due to a traffic spike. The WSB activists have already found Telegram as a censorship-free means of communication.
Big Capital strikes back
Over the course of the trading day, GME fell by over 25% along with many other stocks involved in the r/WallStreetBets pump. Institutional investors on the other hand were able to freely trade. This imbalance in trading instruments gave them the opportunity to recover some of their losses.
Although the retail trading app Robinhood claims to have made this decision in order to protect its users, much suspect cronyism to be the real reason for the trading suspension. A Reddit user who claims to be a Robinhood employee reports that the app’s co-founder Vladimir Tenev received calls from hedge funds and even the white house that urged him to suspend trading. The disgruntled trading activists at r/WallStreetBets are now preparing a class-action lawsuit against Robinhood.
https://twitter.com/dhruvinvekaria/status/1354863502641553416
DeFi projects want to attract WSB Traders
Some DeFi projects, especially decentralized exchanges have taken the opportunity to market their platforms as safe havens for retail traders. Clearly, more decentralized and uncensorable trading solutions are needed and people are beginning to take notice.
In the past retail traders had NO recourse against big hedge funds, the $ class & the suits, but as the fast-growing #wallstreetbets & #cryptocurrency movements prove, this is a new day & age where the Internet/decentralization changes EVERYTHING, now it's possible to fight back!
— Timothy Sykes (@timothysykes) January 28, 2021
Meanwhile, hedge funds are learning a lesson in financial responsibility, but the activist traders need to learn the same lesson. Another pump set forth by Elon Musk has occurred for Dogecoin, which is currently up almost 200% daily. Since trading is a zero-sum game, there must be a loser for every winner in a pump-and-dump scheme. In the case of GME, hedge funds were the losers. In the Dogecoin case, the retail traders can only make money from other retail traders. Coordinated activist traders such as the r/WallStreetBets need a financially sustainable long-term strategy as much as they need censorship-free trading and investment platforms.
