The Robinhood scandal is gaining momentum

The American trading platform Robinhood, which deals with both cryptocurrencies and traditional assets, has come under fire after information emerged that the company was secretly selling confidential data of its users to third parties. Robinhood employees released a statement denying this, but the allegations against the company do deserve closer attention.

The company, founded with the goal of providing traders with a free and fair alternative trading platform, currently boasts more than four million clients. 

First, it's worth pointing out that Robinhood is not the only platform that allegedly engages in such activities. Many of the company's competitors also sell information to high-frequency trading (HFT) firms, but this activity generates only a small portion of their total revenue. According to North of Sunset Publishing's Logan Kane, Robinhood is paid at least ten times more than traditional trading firms for selling information.

In his report, Kane points out:

"Robinhood not only sells customer order information, but also earns much more than its competitors for doing so. Other brokers typically receive only a small percentage of their income, but Robinhood appears to operate very differently."

Kane also says that that some of the HFT firms Robinhood partners with are “far from saints.” He gives examples of companies such as Citadel, Two Sigma, and Wolverine Securities and how they have been repeatedly punished by regulators for unfair and illegal practices.

Robinhood denies the allegations

As expected, Robinhood did not remain silent in this situation. Fearing a backlash, the company's head of communications, Jack Randall, tweeted a statement on behalf of the trading platform. Randall pointed out that federal law requires any licensed broker to distribute customer order information to all national and regional stock exchanges at the optimal price. 

Randall also pointed out that multiple posters failed to update or remove the information they contained, even after Robinhood employees issued a retraction. He categorically stated that the company does not sell the data of its users and does not intend to do so in the future...

But the question remains open: who is lying? - the head of the communications department or the company’s report filed with the SEC?

Robinhood officially began operating in the cryptocurrency market in January 2018, opening a trading platform for digital assets without commission fees. Initially, currencies such as Bitcoin, Ethereum, Ripple, and 13 others were available on the site.

According to blokt.com