GameStop Debacle: DeFi Solves This

Reaction to HFSC Committee Hearing

The House Financial Services Committee’s hearing on the Gamestop / RobinHood debacle provided a foggy window into the shortfalls of traditional finance.

When you cut through all the “I appreciate the question” and “Thank you for that important question” stonewalling, robotically articulated by Vlad “Totally-Not-A-Vampire” Tenev, two issues clearly stood out: equal opportunity and real-time settlements.

It’s really quite simple. You can’t turn off trading for retail investors of your app and call that equal opportunity. Shutting down RobinHood’s retail investors’ abilities to buy certain stocks allowed bigger companies like RobinHood and Citadel, the world’s largest market maker, to unfairly manage their risks by taking advantage of a loophole that avoided real-time settlements.

As a retail investor using the RobinHood app, you are limited to the use of a few buttons. Nowhere in your hamburger icon is the ability to shut off selling for companies like Citadel. You don’t get a pause button or a phone-a-friend option for bad trade calls.

RobinHood, on the other hand, does. They took advantage of an undisclosed wild card that allowed them to shut down buying of popular stocks to appease their dark overlords in the Citadel which…