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Capital Markets


#311
The 'Unlimited Money' Cheat Code

Published:

Nov 09, 2019


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Posted In:

Capital Markets

Published:

Nov 09, 2019


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Robinhood was living up to its name this week – inadvertently giving money back to the people!

Some Robinhood Gold users took advantage of a glitch that saw one trader turn a $3k deposit into a $1.7m position through unlimited leverage. The glitch involved a trade that incorrectly added the full value of sold “super charged” options to the user’s cash pile, giving them more buying power.

Audacious users were able to repeat this trade with no limit, which spurred Reddit users to call this the “unlimited money" cheat code. In the end, only 20 cheeky users were able to pull off the trades, and it is estimated to have cost Robinhood less than $100k - a blip considering the fintech has raised more than $500m in venture funding.

But the real blowback for Robinhood might be in Washington D.C. This lapse will not look good in front of the SEC or FINRA as Robinhood is seeking a bank charter. This comes on the heels of another regulatory mishap when Robinhood falsely claimed their checking accounts where SIPC-insured.

Other fintech companies who are just adding brokerage capabilities are surely keeping an eye out to avoid the money cheat code – with Square’s Cash App adding zero-fee trading and fractional stock investing.

The traders could be in legal trouble too – with a Georgetown law professor saying that this could become a securities fraud case, with users needing to pay back all borrowed cash.

So it seems the old adage holds – money doesn’t grow on trees!

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TradeBlock's the Hard Fork – weekly market commentary - In this week's edition, TradeBlock covers Genesis surge in crypto backed loan originations, Deribit's invalid liquidations, and Binance opening up a Beijing office as China changes its stance on digital currencies. Read more

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The 'Unlimited Money' Cheat Code


Robinhood glitch lets traders borrow unlimited funds to buy stocks - The mobile trading app that has more than 6m users is contending with a glitch in its platform that enabled some traders to "supercharge" their trades with unlimited borrowed money. Read more

Industry News


Square's Cash App sees revenue increase 115% from last year - Square's earning report for Q3 of 2019 showed the Cash App growing and monetizing. In Q3, total net revenue for Cash App was $307m. Read more

India’s Unified Payments Interface (UPI): breaking the billion barrier - UPI is closing in on a significant milestone: one billion transactions per month. In September 2019, UPI clocked 955m transactions, amounting to 1.61tr rupees (INR) or $23bn. Read more

Uber announces deeper push into financial services with UberMoney - Uber will be giving its 4m plus drivers around the world access to a mobile bank account so they can get paid after each ride. With 40% of Uber rides still paid for in cash, it is also likely contemplating a bank account for its nearly 100m consumers on the platform as well. Read more

A startup is cashing in on India’s $1tn gold stash - Indians stockpile more gold than citizens of any other country, and their hoard is 7x the amount of gold mined globally in 2018. Rupeek Fintech keeps transactions with customers discreet by coming to their home to pick up jewelry and heirlooms that they can borrow against. Read more

Plastics still matter to payments - For all the publicity on digital payments, most consumers still rely on good old plastic cards to transact - and someone has to make them! Now that Fiserv owns First Data, all of its plastic-card sales will be booked as revenue. Read more

China fears weigh on launch of Hong Kong virtual banks - Chinese entrants who sensed an opportunity to disrupt Hong Kong's financial centre are stuck in testing mode after winning licenses to enter market. One protester, an actuary in his late 20s, said “I don’t even go to pro-government restaurants, why would I go use a Chinese bank?” Read more

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Select Financings


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