Report Indicates RobinHood Flaw Provided Free Money for Traders

A report indicates that trading App Robinhood had an interesting flaw in its platform that enabled some users to access unlimited borrowed funds.

According to a write up by Bloomberg, users in the Reddit forum WallStreetBets were able to take advantage of the flaw. Investors were apparently selling covered calls using borrowed money which was immediately added to a users account. The more money you borrowed, the more Robinhood was willing to lend. Forum members dubbed the exploit the “infinite money cheat code.”

Typically, in a margin approved account investors may borrow only up to a certain percentag of the securities or cash held in one’s account.

Bloomberg states that one trader was able to turn $2000 into $50,000 worth of purchasing power.

Another apparently bragged about turning a $4000 deposit into a $1 million position.

Robinhood is said to be aware of the exploit and “communicating directly with customers.”

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