GME Event | Cash App temporarily halts stock trading, Robinhood CEO may testify
From retail investors rallying to successfully squeeze the big whales, the GameStop GME event not only highlights the principle of capitalism reigning on centralized platforms but has now escalated to a regulatory level issue. The CEO of Robinhood may attend a hearing, while Cash App is also affected by the suspension of its clearing broker services.
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Trading of AMC and NOK Temporarily Halted
Cash App is a payment application launched by Square, the payment platform owned by Twitter CEO Jack Dorsey. Cash App announced today on Twitter that trading of AMC and NOK has been temporarily halted.
The clearing broker who processes our trades, Axos, has temporarily halted buys of $AMC & $NOK. This was not Cash App’s decision – we disagree with this move wholeheartedly. We hope to make these stocks available for purchase again as soon as possible.
— Cash App (@CashApp) February 2, 2021
According to theannouncement, Cash App emphasized that this was not intentional but due to its clearing broker, Axos. Due to a significant increase by the Depository Trust Company, DTC, in the funds required by Axos for certain stocks, Axos did not have sufficient funds, leading to the trading halt on Cash App.
Users can still sell stocks but are unable to buy, and the affected stocks include AMC Entertainment AMC and Nokia NOK, with Axos being asked to increase its funds reserve by 250%.
Although Cash App later updated that users can continue normal trading for the remainder of the day, there is no definite news on whether Axos will meet the increased fund requirements in the future.
Robinhood Raises Funds, CEO to Attend Hearing
Previously reported, Robinhood restricted trading on many stocks citing market volatility, which not only drew attention from U.S. lawmakers but also prompted a statement from the SEC to further investigate the matter.
According toreports from foreign media, sources claim that Robinhood CEO Vlad Tenev will testify before the House of Representatives on February 18 to explain the stock trading restrictions.
As of now, Robinhood has raised $3.4 billion for financial needs, citing rapid growth in user numbers.
Twitter founder Jack Dorsey retweeted Cash App's tweet, and his emoji-laden tweet seems to suggest to users to safeguard their assets and observe the market fluctuations.
— jack (@jack) February 2, 2021