Robinhood banned GameStop buying. Now Webull has, too.

Much like Twitter and Facebook, Robinhood seems to have found itself out of options.

Robinhood app

Robinhood lets anyone trade — but they can't trade the stocks they want to right now.

Photo: Robinhood

On Thursday morning, Robinhood started blocking users from buying stock in GameStop, AMC, BlackBerry, Nokia and other stocks at the epicenter of wild market volatility. "In light of recent volatility, we are restricting transactions for certain securities to position closing only," the company said. Other trading apps were soon forced to follow suit, when clearing house Apex said it would no longer accept buy orders of some of the volatile stocks.

On its face, Robinhood's decision doesn't quite make sense. Robinhood has seemingly benefited from the retail investor-fueled boom: The long-time favorite of Reddit's WallStreetBets community has rapidly gained traction in the wider world, surging to the top of the U.S. App Store charts on Wednesday.

By blocking the most popular stocks from being traded, Robinhood instantly ignited fury from some of its users. "This is market manipulation" was the headline of one top Reddit post this morning, while another proposed a class action lawsuit against the company. These people know how to hold a grudge, remember: They've spent the past week boosting GameStop stock partly because they're mad at a hedge fund.

Robinhood's not the only brokerage to take action. Others, including Interactive Brokers, TD Ameritrade and Charles Schwab have introduced certain restrictions, such as raising margin requirements. But Robinhood appears to be the only U.S. brokerage to have voluntarily banned purchases — and as the poster child of democratized retail investing, the decision feels both more important and unexpected than the others'.

So why did Robinhood do it? It seems to be betting that it's the least bad of the available options. While Redditors might know what they're doing with these stocks, the bulk of the people downloading the app on Thursday morning probably couldn't explain how the GameStop short squeeze works. If the stock crashes — which many think is inevitable — those new, inexperienced users will likely be very, very mad. Looking for someone to blame, they might pick Robinhood for failing to protect them.

It's not just users Robinhood has to worry about, either. Last month, regulators in Massachusetts filed a complaint against the company for exposing investors to "unnecessary trading risks." They accused it of "falling far short of its fiduciary standard" to investors, arguing that the company has gamified stock trading to an unhealthy degree. Stepping in today is one way for the company to show that it is willing to protect investors when they're at risk, potentially keeping regulators at bay.

Earlier in the day, Robinhood users appeared to be abandoning ship in favor of other apps, including Webull and Public. But the party ended for both of them, too, when Apex said it would no longer accept buy orders for the stocks. Still, by pulling the plug later than Robinhood, and by blaming a third party for the decision, Webull and Public might be able to save face.In the same way that Twitter and Facebook's Trump ban boosted moderation-light apps like Parler, Telegram and Gab, Robinhood's difficult decision could light a fuse under its competition.

This story is developing and has been continually updated.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep Reading Show less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep Reading Show less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep Reading Show less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep Reading Show less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins