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The Dark Side of Investing in Mobile Games! Teenagers take a tragic path with Robinhood, Binance attempts to prevent similar tragedies

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The Dark Side of Investing in Mobile Games! Teenagers take a tragic path with Robinhood, Binance attempts to prevent similar tragedies

The pandemic has hurt the stock market, leading the Federal Reserve to print an unlimited amount of money to support the market, resulting in a peculiar situation where the U.S. stock market appears to have value without substance. According to previous reports, research firm Bianco Research even believes that this is a market where investors cannot lose, causing professional investment institutions to hesitate while individual investors rush in to buy at low prices.

Among these individual investors, many are first-time investors who are inexperienced with the turbulent investment market and its ever-changing strategies, leading to tragic incidents such as a teenager in the United States committing suicide due to investment losses. Many cryptocurrency players are also first-time investors. As an exchange, what can be done to better support them?

Investing in Mobile Games? Young People Are Willing to Invest, But...

Alexander E. Kearns, a 20-year-old American who enjoys studying investments, tragically took his own life after discovering that his account balance on the popular investment app Robinhood had plunged from $16,000 to a negative $730,165 due to trading options. Before his death, he left a note on his computer:

How can a 20-year-old with no income get access to nearly a million dollars' worth of leverage?

According to a report by Forbes, Kearns noted in his letter that he never authorized margin trading and was shocked by the resulting losses.

Forbes also mentioned that Kearns likely misunderstood the temporary nature of the negative balance in his account. Since he invested in a bull put spread, after the first batch of options was processed and before the second batch was exercised, there would be a temporary appearance of a negative cash balance on the interface.

In response, Robinhood has promised to continuously improve its platform and review its options trading services.

Robinhood's interface, designed for the younger generation, offers commission-free trading, allows fractional stock purchases, and has enticing referral rebate activities. With the recent frenzy in the U.S. stock market, Robinhood has accumulated 13 million users.

Robinhood is popular among young people

Trading stocks can be fragmented, with assets spread globally, and even cryptocurrencies can be traded without the need for a deep understanding of blockchain technology. The user-friendly interface is reminiscent of a game and can be addictive.

While young people are now willing to invest, what is the overlooked aspect?

Binance Implements "Responsible Trading" to Educate Users on Accountability

Binance, a popular cryptocurrency exchange among the younger generation, initiated the concept of "responsible trading" in May. This concept emphasizes taking full control of one's trades and being accountable for one's actions, avoiding risks of unbearable losses.

The article highlights a key point, which is "practice." It outlines four main points:

  • Exercise self-discipline by reminding oneself to avoid compulsive trading behaviors or a gambling mentality. Binance continually warns users about trading risks and the risks associated with more complex products like derivatives.
  • Continuously educate oneself by learning through objective knowledge platforms to maintain sharpness.
  • Learn about risk management by setting stop-loss and take-profit targets through risk management trading strategies on the trading interface.
  • Know when to stop by recognizing unhealthy trading habits.

On June 19, Binance founder Zhao Changpeng (CZ) expressed sadness over the incident and shared the measures Binance has taken to prevent trading addiction. In a notice, it was mentioned that in the event of continuous losses in options trading, trading may be temporarily suspended, and a notification for "anti-trading addiction" will appear.

CZ mentioned that this measure was planned two months ago and implemented a month ago, urging other exchanges to follow suit with such protective measures.

In the user protection statement released in May, Binance reiterated its stance on leveraged tokens, stating that its own version of leveraged tokens is an improved product in response to user protection policies.