Over the past few days, a number of stocks, such as GameStop (GME) and AMC Entertainment (AMC), have risen dramatically in price, reportedly in line with attention from Reddit users buying in the face of selling pressure from big players. Popular trading platform Robinhood subsequently began restricting customers’ ability to buy multiple assets associated with the drama. When asked about his thoughts about Robinhood suspending GameStop stock purchases, Richard Byworth, CEO of crypto exchange EQUOS, noted the importance of freedom in the markets.
“It's always important to have free and transparent markets for all traders, and maintaining an open trading book that is available for everyone to use is a responsibility of all trading venue providers,” Byworth told Cointelegraph. “The GameStop issue and platform responses will likely see crypto assets come more into focus.”
On Jan 22, one share of GME cost about $53, according to TradingView.com data. By Jan. 28, GME hit a peak of roughly $508 per share. In the hours following its peak price, the asset dropped all the way back down to approximately $113. Since then, GME has remained volatile in price, ranging between about $197 and $411.
“I think it’s clear indication of how broken and fundamentally rigged the traditional financial system is,” Aleks Svetski, co-founder and CEO of Amber, a Bitcoin investing platform, told Cointelegraph.
“This will set all of the wrong precedents and is one of the final nails in the coffin for the relationship between Main Street and Wall Street,” he added. “The WSB people are also likely to move to Bitcoin next as they realise it’s the only thing that can’t be turned off.”
The folks thought to be responsible for the surging stocks are part of subreddit called Wall Street Bets, sometimes shortened to WSB. The squad reportedly looked for stocks with vast short-seller interest and bought up shares of those assets, causing price rallies, a CNBC article said on Wednesday. Robinhood suspended the purchase of certain associated assets on Thursday.
What type of effects might Robinhood’s asset purchasing suspension have on the crypto space going forward? “Situations like this show why regulation is important and ensuring there are orderly markets, equal access to information for everyone and trading venues that provide customers with fair opportunities to trade, hedge and take a position,” said Byworth, adding:
“In crypto, there have been some exchanges that have not provided this kind of trading environment, and often it is the customer who loses. It is incumbent on exchanges to provide a safe, transparent and compliant trading environment so that investors can access markets that are trusted - by regulators and by traders. At EQUOS, we do not trade against clients on our platform like most crypto exchanges nor do we sell our clients data to High Frequency Traders like many traditional brokers have done.”
The United States Securities and Exchange Commission, or SEC, recently expressed the intent to investigate the events of the past few days.