Robinhood, a brokerage firm that offers trading services for traditional stocks as well as the crypto asset is currently facing nearly 46 lawsuits for blocking trades of Gamestop (GME) stocks at their price peak. The firm in a regulatory filing on Friday revealed that it is facing at least “46 putative class actions and three individual actions” over the trading restrictions last month. The firm in its official filing wrote,
As of the date the financial statements were available to be issued, we have become aware of approximately 46 putative class actions and three individual actions that have been filed against RHM, RHF, and/or RHS in various federal and state courts relating to Early 2021. Trading Restrictions. The complaints generally allege breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, breach of fiduciary duty, and other common law claims.
The firm had claimed the halting of GME stocks was done to protect traders from a volatile market, however many accused the firm of being short on liquidity. Many others also believe Robinhood blocked GME trading at the behest of investors in the firm who also held a significant position in Melvin Capital, the hedge fund that had bought most of the short positions against GME.
Robinhood is Planning on Going Public This March
Right after claiming that the firm was facing no liquidity crisis owing to the GameStop frenzy, the firm went onto raise over a billion dollars in a private funding round. Amidst several lawsuits and private fundraising, the firm is now planning to hold its IPO as early as March.
— Bloomberg (@business) February 27, 2021
The mobile trading and brokerage firm also faced the ire of the crypto world primarily because of its unethical means to block GME stock trade and later because it also halted Dogecoin trading on its platform.