Error in popular stock trading app Robinhood lets people borrow huge amounts, including a user who has received $ 1 MILLION dollars with just a deposit of $ 4,000
- Users have reported that they use $ 4,000 deposits to take $ 1 million risk
- The glitch allows users to continuously borrow money to execute transactions
- Robinhood says it is still working to resolve the malfunction
- Experts warn that both Robinhood and its users are at risk because of the error
A glitch in the mobile stock trading app, Robinhood, is the & # 39; infinite money cheat code & # 39; after users have inadvertently granted enormous trading power.
As noted by Bloomberg, premium users of the app – a mobile platform that allows people to buy and sell shares in addition to trading options – reported that with a deposit of just $ 4,000 they could take a position of $ 1 million.
Yet another user provided evidence that the app had him use a $ 2,000 deposit to make $ 50,000 in options requests on Apple shares – the money was subsequently lost, Bloomberg reports.
A glitch documented in the stock trading app Robinhood allows users to borrow an infinite amount of money from the company that can be used for trading
Above is a screenshot of a Robinhood user who could use a deposit of $ 4,000 to withdraw more than $ 1 million in purchasing power
The glitch seems to focus on a system error with how Robinhood assesses the purchasing power of a premium user – the amount of money that can be used to trade shares or options.
Premium users who pay Robinhood $ 5 per month may use company money to trade with.
However, users noted that after using that money to buy covered calls – a type of option trade that allows someone to buy or buy a share at a predetermined future price – Robinhood incorrectly assessed the value of those calls for their purchasing power.
This means that the more money they borrow, the more money Robinhood lends them for future trading.
As reported by TechCrunch, Robinhood seems to be working actively to resolve this issue, which means that the outage is probably still ongoing.
& # 39; We are aware of the isolated situations and communicate directly with customers & # 39 ;, the TechCrunch platform told in a short e-mail statement.
Despite the fact that users & # 39; have infinite money & # 39; is said, the error is reportedly a risk to both Robinhood and users.
Bloomberg also notes that users can be held liable for securities fraud because they knowingly use Robinhood's large loans to trade with.
Robinhood recently started allowing users to trade in options, including placing calls and shares
& # 39; If there is an element of cheating that you have obtained this by exploiting a loophole in a system, I can see how that could become a case of securities fraud & # 39 ;, said Donald Langevoort, a professor at the University of Georgetown at Bloomberg.
& # 39; The other option is only the general basic law of restitution. If you abuse someone's mistake to fill your own pockets, you have to pay it back. & # 39;
. [TagsToTranslate] Dailymail