- Robinhood limited users' accounts using "infinite leverage" error, and an expiring letter detailing how the company alerted participating merchants.
- The company confirmed the legitimacy of the notice but could not comment on whether all users received the same letter.
- The Notice details three options that a trader can use to liquidate assets and states that all "negative equity balances" must be repaid within 60 days.
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Robinhood limited the accounts of users using a "infinite lever" error and an outgoing letter sent to a terminated merchant revealed how the company announced the termination of the account.
A spokesman for Robinhood confirmed the legitimacy of the notice, but could not comment on whether all users received the same letter. [1
- to perform an automatic transfer of a client account from another intermediary service
- to request an automatic transfer of a clearing house to a bank linked to their Robinhood account
- to request a written check to address in the file.
The Notice adds that the user's account is restricted to position closing transactions only. Traders with "negative equity balances" must settle their debts before their accounts are completed after 60 days.
Read the full letter below. Personal information has been edited:
The hack was first discovered by members of r / WallStreetBets subreddit after a merchant turned a $ 2000 deposit into a $ 50,000 position. The trade involves customers selling borrowed money options through Robinhood Gold. The app then incorrectly added the value of the options sold to the users' cash pool, allowing them to repeat the trade without clear boundaries.
A spokesman for Robinhood said Thursday that the company has closed the door and introduced a "permanent update" designed to "prevent anyone from engaging in this transaction model."
"We will continue to keep a close eye on all kinds of abuse our platform and we will take action as appropriate, "the spokesman said. Now read more coverage on Markets Insider and Business Insider markets: reportedly considering a $ 10 billion investment in Saudi Aramco's record – breaking the IPO
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