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Home / Business / Copycat Traders Increase Each Other When Utilizing Robinhood's "Infinite Money" Mistake – And One User Now Has A $ 1.7 Million Portfolio

Copycat Traders Increase Each Other When Utilizing Robinhood's "Infinite Money" Mistake – And One User Now Has A $ 1.7 Million Portfolio



  Breaking Bad Money AMC

  • Merchants use an error in Robinhood's app to trade with an endless supply of borrowed cash, and one user said they made a $ 3000 deposit to a stake of 1, 7 million.
  • Call_Warrior, a member of r / WallStreetBets subreddit, posted screenshots on Tuesday night showing how the bug was used to buy 47,600 shares of Advanced Micro Devices. The post has since been deleted.
  • The trade entailed an error that adds the value of sold call options to the purchasing power of users. There does not seem to be any limit to how many times the trade can be carried out.
  • A Robinhood representative, Lavinia Chirico, said in an email on Tuesday that she was "aware of the isolated situations and communicated directly with customers." [1
    9659004] Visit the Business Insiders homepage for more stories.

Traders rise with glitch in Robinhood's trading app, and a user holds the crown after making a $ 3000 deposit to a $ 1.7 million position.

A member of the r / WallStreetBets subreddit who goes by Call_Warrior posted on Tuesday about using trading errors to leverage a deposit to own more than $ 1.7 million of the Advanced Micro Devices stock. The post has since been deleted, but screenshots showed that the app was used to collect 47,600 shares of AMD.

"After realizing that I only had a few thousand dollars to gamble, I decided why not try this new & # 39; glitch & # 39 ;," Call_Warrior wrote. "After watching people on the almighty wallstreet bet wager a scary 50k or so average with this new feature available, I thought it was just a clear choice to raise the average for the good of everyone."

The deal involves Robinhood Gold users selling call options with money borrowed through the app. Robinhood then incorrectly adds the value of the options sold to the user's cash register, giving them more purchasing power. Traders can repeat this cycle, and there seems to be no limit to how much a user can use the trick. A person at r / WallStreetBets described the error as an "endless money talk code."

A Robinhood representative, Lavinia Chirico, said in an email on Tuesday that she was "aware of the isolated situations and communicated directly with customers." The company did not comment on when the bug should be fixed, but the app received an update on Tuesday.

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Call_Warrior saw the glitch's unlimited potential as a challenge, and commented Wednesday morning on plans to "buy as much AMD as possible" and said the motivation came after the trades came from seeing other traders' disappointing positions.

The app's error was detected by a r / WallStreetBets member who runs ControlTheNarrative, who said they used the error to make a $ 2,000 deposit to $ 50,000 for Apple sales options. When the iPhone maker traded higher the day the options expired, the Reddit user lost the borrowed money and later posted a reaction video on YouTube.

A few days later, someone with the user name MoonYachts said they took advantage of the mistake of making a $ 4000 deposit into a $ 1 million position. MoonYachts explained how they were trading and said to other users "DON'T DO THIS."

It is not immediately clear what the legal consequences of the trade are, but a Georgetown University legal professor warned that Robinhood traders could meet a number of consequences.

"If there is an element of deception that you got this by exploiting a loophole in a system, I can see how it could become a case of securities fraud," Donald Langevoort told Bloomberg, adding that traders may have to also pay restitution on the borrowed cash.

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