Stock trading app Robinhood seemingly profited off of retail investors who turned to memecoin Dogecoin to protest the trading platform restricting their ability to buy GameStop stocks.
When Robinhood temporarily barred its retail customers from buying GameStop stocks, purportedly as a reaction to reddit’s r/WallStreetBets community buying it in an attempt to squeeze out the major hedge funds shorting the video game retailer’s stock, many decided that they would protest by buying Dogecoin (DOGE) instead.
However, the plan may have backfired in a big way, according to blockchain analytics firm Elliptic’s chief scientist and co-founder, Tom Robinson.
According to a Feb. 17 Bloomberg report, Robinhood customers’ demand for Dogecoin was so high that it apparently made Robinhood the world’s top holder of the memecoin — meaning the platform raked in the fees on a huge number of trades. He commented on the richest wallet address on the network:
“It almost certainly belongs to Robinhood… The timings of its creation, and the creation of the addresses that it received funds from, match the timings of Robinhood’s support of Dogecoin.”
A Redditor came to the same conclusion in a Feb. 16 post. In his investigation, u/AndreiFromAlberta explained that the wallet apparently receiving those transactions appears to be Robinhood’s current cold storage address. The investigation was apparently made in reaction to the concern recently expressed by the world’s richest person, Elon Musk, that Dogecoin sees too much concentration and major holders should sell their holdings. The post reads:
“According to my analysis and calculations of Top 13 addresses, the real Dogecoin Whales account for less than 20% of Top-13 supply, and less than 10% of all Doge supply… So can Elon Musk stop the Over-Concentration FUD please? DOGE is no more concentrated than TSLA share ownership!”
Robinhood did exactly what retail traders wanted it to do once again, and decided to neither confirm nor deny if it controls said address. In a Feb. 17 tweet, the exchange wrote:
“We are not alone. Just like other crypto platforms, for operational security reasons and to protect customer privacy, we will not confirm which addresses do or do not belong to us.”
Robinhood CEO Vlad Tenev and the CEOs of hedge funds Citadel and Melvin Capital Management will testify live before the House Financial Services Committee at noon ET on Feb. 18. Robinhood has argued that it did not halt trading on GameStop to help Citadel, a major client and investor, but because it ran short of cash necessary to fund the massive volume of trades.