Robinhood Traders Discovered a Glitch

A glitch in the Robinhood Markets Inc. system is allowing users to trade stocks with excess borrowed funds, giving them access to what amounts to free money.

According to a Reddit user, the so-called “infinite money cheat code” bug is being exploited and at least one user “bragged about a $1 million position funded by a $4,000 deposit.”

Robinhood’s spokesperson Lavinia Chirico claims the company is aware of the situation and “communicating directly with customers.”

The traders using what they called infinite leverage to supercharge their wagers could be held liable for the money and guilty of securities fraud, according to Donald Langevoort, a law professor at Georgetown University.

“If there’s an element of deceit, that you got this by exploiting a loophole in a system, I can see how that could become a securities fraud case,” Langevoort said. “The other possibility is just the basic common law of restitution. If you take advantage of someone’s mistake to line your own pockets, you need to pay them back.”

One trader managed to turn his $2,000 deposit into $50,000 worth of purchasing power, which he used to buy Apple Inc. puts. He subsequently lost that money and posted a video of the wipe-out on YouTube.
robinhood glitch

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