A bug in the Robinhood trading app allowed clients to take leverage over 800x

A bug in the Robinhood trading app allowed clients to take leverage over 800x

Reddit users reported an anomaly in the application of the American platform for trading stocks and crypto assets Robinhood, which allowed customers to borrow huge amounts.

A recent glitch in the Robinhood stock trading app allowed users to abuse the margin trading feature and borrow up to $1.7 million with no more than $2,000 in their account. The leverage used by some traders was actually more than 800x, which is many times higher than the opportunities usually provided by exchanges.

News about the error quickly spread on the Internet, one of the first to notice the anomaly
Reddit users. One of them said that he was able to use margin trading to buy 100 AMD shares with only $3,800.

After that, he sold the purchased shares and returned the money, and then, taking into account the profits already received, bought even more AMD shares. He repeated this process over and over again and used margin trading to maximize profits.

Since the legality of such trading is questionable, we can expect the reaction of the app’s creators and regulators. Users who abused the crash will most likely not be able to cash out, as transfers usually take a couple of days. It is unclear how the company will get out of this situation.

Recall that the American platform for trading stocks and crypto assets Robinhood received
licensed by the UK financial conduct authority (FCA) to operate in the country in August. And in July, Robinhood announced
on the completion of the next round of funding, in which it received $323 million. The company’s total capitalization reached $7.6 billion.

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