WallStreetBets in Congress

There was a rowdy hearing on the scandalous GameStop stock story at the Capitol. In January, grassroots investors on the reddit staged a massive buyout campaign, which led to a sharp rise in the share price and brought several large hedge funds to the brink of bankruptcy

The liberal press called the phenomenon a “stock market revolt”. Major US trading platforms like Robinhood blocked the purchase of stocks popular on the reddit, accusing ordinary investors of “market manipulation”.

A month later, reddit’s notorious players were invited to Congress, along with Robinhood founder Vlad Tenyov and Ken Griffin, head of Citadel, one of the largest hedge funds in the US.

A few days before the hearings, Robinhood was the subject of another major scandal. They revealed details of their relationship with big hedge funds (including Citadel), to which Robinhood actively leaks information about all transactions of its investors.

Robinhood’s business was based on this from the beginning. Subsequently, the data sold was used for the forbidden practice of “frontrunning”. It involves hedge funds using insider information about their clients in order to trade earlier and faster than them.

So it comes as no surprise that, once the hedge funds were in a difficult situation because of GameStock’s soaring stock price, dependant Robinhood immediately ran to rescue their patrons, who are far nicer to them than their own clients.

During the hearings, neither Griffin nor Tenyev were able to explain their financial fraud. The congressmen accused them of fraud and brazen “ripping off” of ordinary investors. But they are unlikely to face any legal consequences.

Citadel operates under the wing of the Fed: its advisor is Ben Bernanke and its direct beneficiary is Janet Yellen. This “roof” is enough to survive any difficulties – especially when responsibility for them can be blamed on the “populist rebels” who are hostile to them.

Malek Dudakov

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