The day after trading the app Robinhood suspended buying bullish stocks like GameStop and AMC, infuriating customers, the app disabled an important cryptocurrency buying feature on Friday.
The paid feature, Instant Buying, allows customers to transfer funds from a bank account and use the funds immediately, before they are paid off.
“Due to extraordinary market conditions, we have temporarily turned off instant purchasing power for cryptography,” Robinhood said in a statement to Yahoo Finance. “Customers can still use the settled funds to buy encryption. We will continue to monitor market conditions and communicate with our customers. “
Robinhood did not say, in his statement or on his blog about the restriction, what the extraordinary conditions were, nor did he quote specific cryptocurrencies.
But bitcoin (BTC-USD) rose 15% on Friday, a jump accelerated by Elon Musk on Twitter; and the meme-based dogecoin token (DOGE-USD) increased by 165%, driven by social media.
It wasn’t just Robinhood. Amid the market craze this week, TD Ameritrade and Schwab imposed restrictions on margin trading on rising stocks, limiting how much customers could borrow for trading; Webull, an application that Robinhood users fled to after Robinhood’s restriction, also restricted the purchase of the same shares. The shares are seen as optimistic for cryptocurrency and DeFi (decentralized financial applications), because they can bring new participants to a space without traditional financial intermediaries.
Following Robinhood’s actions this week, the tech unicorn, which has a valuation of $ 12 billion and plans to go public this year, finds itself in dire straits with everyone from lawmakers to customers.
New York deputy Alexandria Ocasio-Cortez, Texas senator Ted Cruz and California deputy Ro Khanna are just a few of the politicians to issue statements of outrage over Robinhood’s action on Thursday, which was seen as damaging to investors retail. Robinhood has already been hit by a collective action by clients because of these events. And the company is in the process of raising $ 1 billion in new emergency funds to cover its cash deficit.
In a blog post on Thursday, Robinhood said that stopping bullish stock purchases was “a risk management decision” and that, “We have SEC net capital requirements and clearinghouse deposits … Some these requirements vary widely based on volatility in the market and they can be substantial in today’s environment, where there is a lot of volatility and a lot of activity concentrated on those names that have gone viral on social media. ”
And in a series of tweets on Thursday afternoon, CEO Vlad Tenev said the app’s decisions on Thursday “were not made in the direction of any market maker we target or other market participants”.
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Daniel Roberts is general editor of Yahoo Finance and has been covering bitcoin since 2011. Follow him on Twitter at @readDanwrite.
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