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Home Blockchain

Robinhood Triumphs in Meme Stock Lawsuit: Appeals Court Dismisses Case

by Dan K
Aug 11, 2023 - 4:24 pm
in Blockchain
A smartphone showcasing the Robinhood app with a backdrop of fluctuating stock charts, indicating the controversial meme stock trading.

Court Upholds Robinhood’s Motion to Dismiss

A significant win for Robinhood Markets, the US appeals court has quashed the class-action lawsuit, emphasizing Robinhood’s legal right to enforce trading restrictions. The lawsuit, initiated by 16 investors in September 2021, criticized Robinhood for preventing meme stock purchases during the notorious hedge fund short-squeeze.

Robinhood’s Defense Proves Persuasive

Defending its stance in January 2022, Robinhood argued the lack of valid claims from the plaintiffs. The investors, undeterred, carried their grievance to the appeals court in 2023, only to be met with another disappointment.

Court’s Perspective: Legal Rights vs Public Opinion

US Appellate Court Judge Britt Grant provided clarity on the verdict, asserting that while Robinhood may have faced disapproval in the “court of public opinion,” its obligations were purely legal. Robinhood’s actions, she added, were well within its legal boundaries, as there was no duty to shield investors from mere economic losses.

The Origin: Reddit’s /wallstreetbets and The Massive Short Squeeze

The heart of this fiasco lies with the /wallstreetbets subreddit, whose users strategically targeted stocks being heavily shorted, leading to skyrocketing share prices for companies like GameStop, which soared from $0.86 to a staggering $86 within months.

Robinhood’s Financial Standing

Diverging from the lawsuit, Robinhood’s recent Q2 results paint a picture of resilience. For the first time since its public debut, the platform reported profits. However, there has been a dip in its crypto revenue, marking a decline of 18% to $31 million. The firm’s crypto asset investments of $11.5 million remained stable.

Tags: LawsuitRobinhoodUS
Dan K

Dan K

Dan K, the chief editor, is a visionary wordsmith, shaping narratives with finesse. His discerning eye for detail creates literary masterpieces.

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