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Financial Services Committee Raises Serious Allegations Against Robinhood

Yesterday on February 18th, 2021, the US House Committee on Financial Services held the first in a series of online hearings that seek to clarify the events surrounding the activities of the subreddit r/WallStreetBets, which initiated a short squeeze to the detriment of several hedge funds and caused the popular trading application Robinhood to restrict buying […]

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Yesterday on February 18th, 2021, the US House Committee on Financial Services held the first in a series of online hearings that seek to clarify the events surrounding the activities of the subreddit r/WallStreetBets, which initiated a short squeeze to the detriment of several hedge funds and caused the popular trading application Robinhood to restrict buying certain stocks. The hearing was led by the committee’s chairwoman Maxine Waters (D), who stated:

I want to know how each of the witnesses here today and the companies they represent contributed to the historic trading events in January. This recent volatility has put a national spotlight on institutional practices by Wall Street firms and prompted discussion about the evolving role of technology, social media and our markets. These events have denominated potential conflicts of interest and the predatory ways that certain funds operate and they have demonstrated the enormous potential power of social media in our markets.

She expressed concerns that many Americans feel that the financial system on the capital market is stacked against them. Patrick McHenry (R), a ranking member of the committee agreed to this in his opening statement, advocating for less regulation that restricts trading opportunities to institutional investors:

In the eyes of our government, you need to be protected. Protected from your own decisions, protected from your own money. Protected from more opportunities. So you’re left with a savings account, which pays no interest and if you need more money than that, well we create a world where it’s easier to buy a lottery ticket than it is to invest in the next Google.

Robinhood Blames Clearinghouse for Trading Halt

In written statements handed in before the hearing, Kenneth Griffin, Founder and Principal Shareholder of Citadel Securities, Gabriel Plotkin, CIO of Melvin Capital Management, and Vlad Tenev, CEO of Robinhood, all denied any allegations of collusion that would have aided short sellers of GME and other stocks pumped by the subreddit.

Tenev also tried to explain the restrictions that made it possible to sell but not to buy the respective stocks.

The trading limits we put in place on GameStop and other stocks were necessary to allow us to continue to meet the clearinghouse deposit requirements that we pay to support customer trading on our platform. We have since taken steps to raise $3.4 billion in additional capital to allow our customers to resume normal trading across Robinhood’s platform, including trading in the stocks we restricted on January 28.

According to Tenev, the SEC-mandated collateral deposit requirements with their clearinghouse NSCC, jumped from 124 million USD on January 25th to 3.7 billion USD on January 28th, due to the increased buying demand and the increased volatility. Robinhood then decided to impose the restrictions to decrease the deposit deficit owed to NSCC.

While this statement is indeed credible, it does not match up with the initial explanation of Robinhood given by Robinhood. On January 28th, Robinhood announced on their social media accounts that they restricted the buying of certain stocks to protect their users from excessive volatility.

The committee Puts Robinhood’s Transparency Into Question

Maxine Waters was the first to raise objections against Tenev’s explanation, as their liquidity issue with NSCC was kept secret from the platform’s traders, also commenting about past issues concerning Robinhood’s security and transparency:

This liquidity problem had real consequences for your customers, but I wonder if they were all that surprised. Between December 2019 and December 2020, Robinhood customers experienced monetary losses due to system outages. Customer accounts were repeatedly compromised. The firm repeatedly failed to testify its best execution obligations and it mislead its customers regarding its revenue sources. It seems retail investors often get a bad deal on Robinhood.

Furthermore, Waters questioned Robinhood’s business model, which receives money from market makers for routing retail trades through them, rather than charging trading fees:

While you testified today that Robinhood’s customers benefit greatly from payment for order flow, in December 2020, the SEC charged Robinhood for not disclosing that it was getting paid to send customer trades to Citadel Securities and other market makers. Rather than seeking the best terms for its customers, Robinhood provided such inferior trade prices, which cost your customers over 34 million. Is it your testimony, after Robinhood paid the SEC 65 million to settle those charges, that this conflict of interest is in your customers’ best interest?

Furthermore, Citadel Securities, who advertise on their webpage that they handle 47% of the entire US-listed retail trading volume, has been questioned about their relationship with Robinhood and possible conflicts of interest:

Citadel Securities pays Robinhood tens of millions of Dollars to process trades by Robinhood’s customers. […] Your firm makes use of private exchanges called dark pools and other off-exchange trading to trade large sizes without moving the market against you. In fact, at some point last month, 50% of all trades occurred in dark pools or via OTC off-exchange trades. Your business strategy is designed intentionally to undermine market transparency and skim profits from companies and other investors.

In the hearing, Tenev has admitted that the lack of clear communication of their capital requirements and business practices was a mistake and apologized to Robinhood’s users, but many aspects of the relationship between retail trading apps, capital funds, and market makers are still unclear.

Blockchain

Real Estate Giant Teams up with Gemini to Buy Bitcoin and Allow BTC Rent Payments

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Caruso, one of the largest estate companies in the US, has entered the BTC space with an undisclosed investment. The organization also revealed it will begin accepting bitcoin as payment for rent following a partnership with Gemini – the cryptocurrency exchange founded by the Winklevoss twins.

Pay Rent with Bitcoin

Without specifying the precise amount, Caruso announced earlier that it had made a “significant initial investment” in the primary cryptocurrency as part of its treasury management strategy. The move has made the company “the first to adopt the technology in the real estate industry.”

The firm completed the purchase through a partnership with Gemini, a US-based cryptocurrency exchange and custodian. The innovation reinforced the company’s confidence in the digitizing space.

Additionally, the firm enabled its tenants to pay rent with bitcoin, should they choose to do so.

Rick Caruso, founder, and CEO of the company weighed in on the topic:


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”We believe that cryptocurrency is here to stay. We believe that bitcoin is the right investment for us. We’ve allocated a percentage of what would normally go into the capital market into bitcoin.”

The billionaire went further and stated crypto is a long-term resolution and ”it’s not about the next year or five years”.

”We are thrilled to partner with Caruso as they continue to push the real estate sector to new heights by embracing cryptocurrency for the benefit of both their customer experience and their own business operations. We are excited to help them execute their digital asset treasury strategy and advise them more broadly throughout their cryptocurrency journey.” – commented Gemini’s CEO Tyler Winklevoss.

The Los Angeles-based company has become a part of the growing institutional adoption of bitcoin around the globe. According to experts, companies like MicroStrategy, MassMutual, Tesla, and more are a vital factor behind BTC’s recent price increase.

Bitcoin as a Form of Payment

While Caruso may be the first firm from the real estate industry to adopt BTC as a payment method, companies from other sectors have well preceded it. Most recently, the popular NBA team Sacramento Kings said it will give the option to its players to receive their salaries in the primary cryptocurrency.

Another fresh example is the UK private jet company – PrivateFly. The organization revealed that nearly 20% of its yearly payments were paid in bitcoin.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/real-estate-giant-teams-up-with-gemini-to-buy-bitcoin-and-allow-btc-rent-payments/

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Binance Coin, BitTorrent Token, Ontology Price Analysis: 10 April

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Binance Coin registered huge gains in the past few weeks. BitTorrent Token could consolidate before seeing recovery, while Ontology could face selling pressure if it falls out of the rising channel it was trading within.

Binance Coin [BNB]

Binance Coin, BitTorrent Token, Ontology Price Analysis: 10 April

Source: BNB/USDT on TradingView

From March 25 to April 10, at the time of writing, BNB has climbed from $225 to $473. Using the Fibonacci tool for its move from $225 to $356, where BNB had faced some resistance in early April, extension levels were plotted. These levels have been reached, and more ambitious targets for BNB lie in the $550 region.

It is not out of the question that BNB reaches these levels, especially with the BNB quarterly burning set for later this month. On the hourly, the RSI continued to stay above neutral 50 to show an uptrend in progress, and no divergence was seen. The Stochastic RSI was dropping toward oversold territory.

BitTorrent Token [BTT]

Binance Coin, BitTorrent Token, Ontology Price Analysis: 10 April

Source: BTT/USDT on TradingView

On the hourly chart, BTT broke out of a descending channel but was rejected at the $0.01 resistance level. Sometimes, breakouts from descending channel consolidate within a range before reaching toward the peak of the channel.

This could be what is happening for BTT. It has resistance at $0.01 and support at $0.0075. The breakout point at $0.0085 is also likely to serve as support.

Trading volume was trending downward. The Awesome Oscillator showed bearish pressure was present, although it was not strong.

Ontology [ONT]

Binance Coin, BitTorrent Token, Ontology Price Analysis: 10 April

Source: ONT/USDT on TradingView

ONT was also trading within a channel, but this one was ascending. Again, the short-term outlook placed ONT right beside a level of importance. There was resistance for ONT at the $2.05 level, and support from the lower boundary of the rising channel.

ONT began trading within this pattern about three days prior to the time of writing. A session close beneath the channel would likely see ONT face further selling pressure to take it to the base of the channel at $1.72. THE OBV has been on an uptrend in recent days but the MACD was beginning to drop.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/binance-coin-bittorrent-token-ontology-price-analysis-10-april

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IOTA co-founder discloses Coordicide’s release date

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The cryptocurrency market has seen the altcoins surge despite the correction witnessed in the short term. IOTA, the altcoin ranked 27th on CoinMarketCap, has grown dramatically on the charts right from the start of the month.

IOTA co-founder Dominik Schiener recently did one of his systematic AMA sessions. He elucidated some of the most important concepts about the development of IOTA and its updates, Chrysalis and Coordicide.

To begin with, Schiener answered a question about the challenges that IOTA 2.0 or Coordicide might face in its deployment process. One of the issues faced by the group of developers was to discover and fix bugs on major components.

The co-founder further shared his optimism on the progress in the AMA session.

“Coordicide will fully decentralize IOTA. On the theoretical side we are doing very well to deliver what is promised which is a fully decentralized IOTA. I think the biggest risk is the implementation.”

At this very moment, IOTA targetted Q4 of this year as a tentative date for Coordicide’s rollout. However, this depends largely on the results of the incentivized testnet, Schiener said:

“A lot of that will depend on how well the incentivized testnet goes, that’s why we always say that the incentivized test network is the most important part of Coordicide. That’s where the research combines with the implementation to test in an open environment.”

Furthermore, Schiener addressed concerns regarding data sharding. The Value Tangle team, just like the Coordicide team, reviewed all the “paths” and possible implementation of this component. Schiener stated:

“I think when it comes to sharding, if I had to sum it up, I think the biggest risk is going to be building a solution that is going to kill IOTA adoption. In a similar way of how they said the biggest risk to Ethereum is Ethereum 2.0.”

What’s interesting to note here, is the analogy with ETH and ETH 2.0. 

Keeping all the risks in mind, Schiener concluded:

“With that in mind, the team have received feedback from their corporate partners to create a solution that the market wants. In large part, Chrysalis will be the culmination of that feedback.”


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/iota-co-founder-discloses-coordicides-release-date

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