Following significant criticism and debate across social media, governmental bodies, and mobile app marketplaces, Robinhood addressed the reasons behind its earlier decision to temporarily suspend trading in certain stocks through a statement on its official blog and the CEO’s Twitter feed.

The restriction of trading in several securities generated considerable controversy, particularly as the consumer trading platform had become strongly associated with both an increase in individual investment activity and a high-risk strategy employed by some investors to drive up the prices of stocks that were heavily shorted, such as GameStop, AMC, and others. Widespread conjecture arose suggesting that Robinhood had limited trading capabilities at the request of various entities, including Citadel, the U.S. government, hedge funds, Janet Yellen, or other influential parties.

However, according to Robinhood’s explanation, these claims are inaccurate. In its published statement, Robinhood indicated (as highlighted by TechCrunch):

This suggests that Robinhood encountered financial constraints and was compelled to make difficult choices in a short timeframe. The securities its customers were attempting to trade likely presented the most substantial capital requirements due to their volatility and the time required for trade settlements, leading Robinhood to temporarily halt trading in those stocks to maintain sufficient capital reserves.

Reports from Bloomberg reveal that Robinhood accessed “at least several hundred million dollars” through credit lines today, which aligns with this explanation. Similarly, the company’s decision to reinstate limited trading of the previously restricted securities in the coming days (“starting tomorrow, we plan to allow limited buys of these securities,” the company stated) indicates that, with increased capital, Robinhood can now accommodate some trading activity.

Robinhood could have provided a clearer explanation of these circumstances earlier in the day. Instead, the company became the focal point of accusations of corruption and other questionable practices, whether justified or not. (A cautionary note: if your hypothesis aligns with QAnon theories, it may warrant further scrutiny.)

The situation remains unresolved. Congressional leaders have expressed concerns. Other trading platforms also temporarily suspended trading in GameStop and other stocks. Public sentiment is negative. Some Robinhood users were required to close out their positions. Despite this, GameStop concluded the trading day valued at over $196 per share, and in after-hours trading, it rose by $72.40, representing a 37.40% increase to $266 per share.

The future course of events is uncertain. However, a degree of skepticism is advised as this unusual situation continues to unfold.