[PSA] Robinhood Insolvency Dangers

I posted this over at r/wallstreebets as well.

Robinhood appears to be on the verge of insolvency based on a few data points:

1. To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million
2. They had to raise an emergency $1 billion from investors today.
3. They stopped allowing users to buy GME and other meme stonks for a full day yesterday.
4. They have severely limited or blocked 50+ stocks, including lots of non meme stonks. More are likely.
5. They are not allowing people to exercise their options, instead they are automatically selling them at a price of their choosing.
6. There appears to be a bank run on Robinhood as people are fed up with the restrictions, this is a negative feedback loop.

If Robinhood goes under the SEC will freeze all the accounts. The SIPC protects up to $500k in accounts.

BUT MOST IMPORTANTLY, IF YOU HAVE CRYPTOCURRENCIES AT ROBINHOOD, IT APPEARS YOU WILL LOSE EVERYTHING!

I am not bullshitting. Look at their How You're Protected support page for yourself:

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Cryptocurrency investments through Robinhood Crypto are not protected by SIPC and that Robinhood Crypto is not a member of FINRA or SIPC.

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Submitted January 30, 2021 at 08:20AM by theaback https://ift.tt/3cp9D88