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Robinhood To Kick-Start Deposit And Withdrawal Services For Crypto

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The Robinhood application had been making rounds for all the wrong reasons these past few weeks. After the application restricted its users from garnering benefits through trading stocks, several users expressed extreme distress about the situation. While the app revealed that it was doing so to secure its users from being subject to volatility, the platform seems to be getting back on its feet.

In a recent series of tweets, Robinhood revealed that it was trying to make a re-entry into the crypto-verse by offering crypto deposits and withdrawals.

Robinhood Aims To Make An Entry Into The Crypto-Verse

The overall crypto market cap hit a high of $1.71 trillion. Bitcoin seems to be aiding this surge as the king coin’s market cap hit a high of $1 trillion. The price of the asset had also soared to a high of $55K. With $60K not very far, the industry seems to be luring in several mainstream platforms.

Robinhood tweeted,

With no dates for the launch of this service was announced, the platform wrote,

“Cryptocurrencies purchased and owned by our customers are held and custodied in our wallets for the benefit of our customers. Additionally, we only receive coins when our customer’s trades have already settled.”

While Robinhood hoards a few prominent cryptocurrencies including, Dogecoin [DOGE], Bitcoin [BTC], Ethereum [ETH], Ethereum Classic [ETC], Bitcoin SV [BSV], Litecoin [LTC] as well as Bitcoin Cash [BCH].

The platform hadn’t even revealed if it would render transfers for all the aforementioned coins.

Additionally, the recent activities of the platform paved the way to an array of concerns pertaining to the platform’s latest venture. One Twitter user went on to ask the app on Twitter if the users would have access to their individual wallets as well as crypto keys. Another Twitter user remarked,

“Why use all these words and terminology. Answer the basic question. We want our own wallets and crypto keys. Can Robinhood do that? Simple yes or no would suffice.”

Fintech looks forward to a brighter 2021 as year winds down with several developments in roster

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The concept of fintech has seeped into multiple layers of society as several organizations have dabbled in the latest technology. One of the main reasons for this rapid adoption was the promise of seamless transactions and a quickfire ecosystem.

As 2020 comes to an end, it becomes imperative to look back at the changes that the financial industry underwent over the past year. There were organizations on both sides of the spectrum, as some made it big while the rest did not live up to raised expectations. 

The organizations that made a niche for themselves by utilizing fintech’s key selling points such as speed and a hassle-free experience. One of the biggest winners in this surge was Stripe with sources stating that the next round of investments may value the company at a whopping $100 billion. The coronavirus pandemic was one of the main reasons for the payment service’s boom as users jumped on board ordering everything at home.

Stripe recently talked about its latest Treasury feature which will:

“Enable platforms like Shopify to offer merchants access to financial products. Platforms can offer users interest-earning accounts eligible for FDIC insurance and enable customers to have near-instant access to revenue earned through Stripe, and then: 1) spend it directly from their balance with a dedicated card, 2) transfer it via ACH or wire transfer, or 3) pay bills.”

Another winner in the fintech race was Chime as the company continues to remain a market leader in customer retention. Customers have early access to their money on Chime, a feature that has garnered the attention of the masses. Chime also offers features such as Spot Me where customers can make overdrawn debit card purchases without any overdraft fees.  While the aforementioned organizations made a killing in the past year, institutions such as credit unions took a major hit.

Places like credit unions relied on the support of customers and how much they were willing to accept its dated offerings. Once a leaner system came into view, credit unions suffered due to a lack of participation from customers. A study conducted in January showed that at least 14 percent of US customers relied on credit unions, a number which shrunk to 10 percent this month.

A major disappointment in the fintech sector came in the unlikely form of Robinhood. The company, which was set to change the way payments were conducted, became embroiled with the SEC for failing to disclose important information. Analysts expect 2021 to be the year fintech establishes itself as a major player in the mainstream financial industry.

Robinhood Swims Out Of Troubled Waters After Agreeing To Pay $65M

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Lawsuits and legal interventions have become remarkably prevalent. Robinhood, a trading platform decided to fend off a lawsuit instead of prolonging it by deciding to pay off the designated fine. The platform had found itself drowning in troubled waters with the Securities and Exchange Commission [SEC] charged the trading application for duping customers and seeking extra money from its users.

Robinhood’s Tiff With The SEC

In an elaborate press release, the Securities and Exchange Commission of the United States called out and charged Robinhood Financial LLC with an array of accusations. This list included the submission of “misleading statements and omissions in customer communications” from 2015 all the way up to 2018. This entailed false assertions in the platform’s FAQ pages where it lied about its revenue sources.

Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit commented on Robinhood’s activities and said,

“Robinhood failed to seek to obtain the best reasonably available terms when executing customers’ orders, causing customers to lose tens of millions of dollars. Today’s action sends a clear message that the Commission will not allow brokers to ignore their obligations to customers.”

The SEC further alleged that the trading platform went on to deceive individuals by hoarding the “commission-free” trading option. While this seemed like an attractive deal to its customers, it was nothing but a mere honey pot as the trading firm charged higher prices for order flow. This was off-putting for many as the prices of other brokers were comparatively lesser. The statement further read,

“The order finds that Robinhood provided inferior trade prices that in aggregate deprived customers of $34.1 million even after taking into account the savings from not paying a commission. Robinhood made these false and misleading statements during the time in which it was growing rapidly.”

The trading application was quick enough to try and get out of trouble. Robinhood went on to agree to pay $65 million as a civil penalty. The platform refrained from accepting or denying the charges imposed by the SEC.

Dan Gallagher, Chief Legal Officer of Robinhood had asserted that the settlement relates to historical practices that do not reflect the platform today. While recognizing the responsibility that comes with having helped millions of investors make their first investments, the executive went on to say that the team was committed to continuing to evolve the trading platform as it grows to meet the needs of its customers. He also added,

“We are fully transparent in our communications with customers about our current revenue streams, have significantly improved our best execution processes, and have established relationships with additional market makers to improve execution quality”

CNBC’s Jim Cramer Claims Top Stocks on Robinhood were Fantastic Opportunities and “very good for speculation”

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The cryptocurrency market and its peripherals are no strangers to speculation and being a major focus of the rumor mills. However, as the years have passed, the industry has been recognized as a major part of economic movement.

This was again proven when Jim Cramer of CNBC’s Mad Money Fame discussed the top stock picks available on Robinhood, one of the world’s most popular cryptocurrency investing platform. Although he did no outrightly endorse the stocks or the application, Cramer claimed that the stocks were ripe for speculation. 

Cramer’s comments came a day after interviewing Robinhood CEO Vlad Tenev where the two officials discussed trending picks as well as the future of the financial markets. The CNBC host is known for his intense take on the financial markets and usually informs listeners on the pros and cons of any investment. Post the discussion with Tenev, Cramer proceeded to rate the highest-rated stocks on Robinhood.

According to the CNBC host, almost all the top stocks were an intriguing bunch with the potential to help investors grow their holdings. He added that the stocks were not perfect but if the given time they could generate returns in a controlled fashion. Robinhood mostly caters to the millennial crowd and Cramer recognized that. He reiterated that the investors need to be careful no matter how solid the stock looks.

The CNBC host’s chosen list of stocks included traditional investments as well as new age stocks. Innovio Pharmaceuticals was one of the newer companies that were making strides in the space. Cramer pointed out that investors should always own one speculative stock and that becomes more important if the investor is young. This was a method of discovering the latest stocks that could boom in the future.

A traditional stock that also came on Robinhood’s roster was Ford with Cramer stating:

“I have to believe this is all about bargain hunters taking advantage of a stock that’s down close to 50% for the year, and they like these $5 stocks. I think that’s a mistake. The stock might be worthless if the company runs out of money.”

Industries related to medical marijuana and cannabis have also become popular over the past couple of years. Remove the stigma associated with it and once could see the thriving economy that can be built from investing in the cannabis industry. Robinhood also recognized this factor and added that Aurora Cannabis was a bright spark in the current economy. Cramer informed people that a possible Democratic sweep in November followed by marijuana legalization could start the next wave of growth.

The other traditional stocks as recommended by Robinhood included Disney, Microsoft, General Electric and Boeing. During his show, Cramer stated that Disney was a brilliant buy with a key interest point for younger customers. Disney’s market value has gone up in recent times especially after creating an entertainment behemoth.

Elon Musk’s Tesla came in at number 10 on Robinhood’s and Cramer’s list. The financial analyst was surprised that the stock did not breach the top 3 ranks as it was one of the more popular car companies in the world right now. Seeing that a majority of Robinhood’s 10 million users were millenials, it made sense to bet on a Tesla as a future commodity.

Robinhood to Provide Credit to Customers Affected by Outages in March

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Cryptocurrency companies have always claimed that customers were the most important cogs in the digital asset ecosystem. This mantra has been the sole crux in organizations ensuring strong customer satisfaction and feedback program.

Robinhood was the latest company to establish a customer partnership when the startup started providing credit to some of the customers impacted by the outages during the trading period. The organization came under fire as a result of several outages that blocked customers during crucial market movements.

Robinhood was hit hard this month after several customers complained that they had been locked off trading during peak market hours. Many of the concerns were about the glitches that caused investors to miss out on the windows on a historic trading day. The cryptocurrency wallet decided to roll out its new features to satiate customers who were affected as well as to build a stronger bond with the community. In an official release, Robinhood said:

“We’d lie to start with the apology you deserve: We’re sorry for the recent outage on our platform. Your support is what helps us democratize finance for all, and we owe it to you to do better. An apology alone won’t rebuild your trust in us. Instead, we hope our actions will.”

Although no amount has been discussed yet, Robinhood revealed that the payments will be conducted on a case by case basis. The wallet was also bashed on social media for the glitch that caused some people to be locked out for two days. It was not a typical shut down as users missed one of the biggest one-day point gain in the Dow Jones Industrial Average in history.

According to the Robinhood honchos, the application had crashed because of the momentum of the market. The wallet witnessed thousands of instant signups and a massive trade volume increase in a very short span of time. The resulting stress caused the wallet’s infrastructure to break down and hence shut out users. Robinhood’s engineering team revealed that they had strengthened and stabilized the wallet’s architecture even further.

It is understandable to see why Robinhood took this route after the meltdown that users had on Twitter during the outages. Several users threatened to pull their funds from the platform while others wanted to sue the cryptocurrency wallet company. Travis Taaffe was one of the Robinhood users who took it upon himself to file a lawsuit against Robinhood on behalf of him and several others.

According to the lawsuit, Robinhood was negligent about its services and caused great financial harm to its users. Mr. Taafe added in the lawsuit that a lot of traders were left in the surge as they were not able to move money during the price hike. The lawsuit has apparently not hurt the company as Robinhood reported historic growth in March. Robinhood spokespersons said that the average trading volume had increased by 3x since the last quarter.

Robinhood was also in the news recently when the company was valued at $7.6 billion. The surge in valuation came after multiple rounds of investments that bestowed confidence upon the company. Sources claimed that the 10 million-odd customers that Robinhood brought into the ecosystem have played a crucial role in giving the industry a millennial edge.