“DON’T DO THIS.” warned MoonYachts in a subreddit feed about an infinite trading glitch in the Robinhood app, where he leveraged a $4K deposit into a million dollar position. Another user in the /r/WallStreetBets subreddit, who goes by the username Call_Warrior, shared screenshots to prove that there was a glitch that allowed him to buy nearly 48K shares of AMD token. That is close to $1.7 million in AMD assets, and he has since deleted the post.
[wlm_private “Crypto Trader Pro – Monthly|Crypto Trader Pro – Yearly|Crypto Trader Pro (Lite)”]
What happened – and why the stern warning?
The glitch happened in the Robinhood app, specifically with Robinhood Gold users who upgraded their access to include margin trading. The error was specifically in the case where users sold call options with borrowed money through the app. From there, Robinhood incorrectly added the value of the options sold to the user’s cash pile, which gave them more buying power – a lot more buying power.
A few margin traders who saw this seized on the opportunity and repeated the cycle of trading, each trying to surpass the other in a sort of leap frog to see who could gain the largest position. At the time there didn’t seem to be a limit on how much could be exploited. The “inifinite money cheat code” has since been addressed; the loophole closed, and the few accounts that took advantage of the glitch have either been suspended or throttled back.
At this point, no one outside of Robinhood knows if further action will be taken against these accounts.
Lavinia Chirico, a Robinhood representative, sent out an email statement to account holders.
“We recently identified a small number of accounts engaging in problematic trading activity on our platform. We’ve quickly restricted these accounts, and made a permanent update to our systems intended to prevent anyone from engaging in this pattern of trades.” And further went on to state that they will be closely monitoring any more abusive activity on the platform.
Donald Langevoort, Thomas Aquinas Reynolds Professor of Law at Georgetown University Law Center in Washington, D.C., and Special Counsel for the U.S. Securities & Exchange Commission in the Office of the General Counsel told Bloomberg News that traders who took advantage of the glitch could potentially face securities fraud charges.
“If you take advantage of someone’s mistake to line your own pockets, you need to pay them back,” he said.
That circles back to MoonYacht’s warning at the beginning. It’s one thing to be on a bug bounty and be rewarded for white hat behavior, but if you’re taking advantage to the detriment of the network, then there may be a steep price to pay – and not just in your pocketbook.
Disclaimer
Content provided by CryptoTraderNews is for informational purposes only, and should not be construed as legal, tax, investment, financial, or other advice. All information is of a general nature. As always, there is risk with any investment. In exchange for using our products and services, you agree not to hold CryptoTraderNews Pro, its affiliates, or any third party service provider liable for any possible claim for damages arising from decisions you make based on information made available to you through our services.
[/wlm_private]
Want to read the rest of the article? Join our pro-membership and receive all of the following:
✅Access to ALL content.
✅Access to the CTN editorial staff.
✅Access to our CTN trading dashboard.
✅Access to our exclusive telegram channel where all our pro-members and editorial staff are in.
✅Ability to request content/research material!
