GameStop: Cruz, Ocasio-Cortez Blast Robinhood over Trade Freeze

Robinhood was not the only broker to limit sales of GameStop. Interactive Brokers on Wednesday said it had placed restrictions on sales of the stock. Charles Schwab said Thursday that its customers could still trade GameStop but noted that it limited certain kinds of transactions involving more risk.

Source: GameStop: Cruz, Ocasio-Cortez blast Robinhood over trade freeze

I am gobsmacked about this whole story. Why did Charles Schwab “limit certain kinds of transactions involving more risk?” I mean, we all understand that what Robinhood is doing is simply unethical. They’re being manipulated behind the scenes by their big-bank investors. At first, Robinhood said they were just going to require enough in a margin account to cover loses. Fine; that’s fair. But Schwab? What trading platform has the balls to say “that trade is ‘too risky’ for us to allow you to make it?” The nerve.

This factors straight into all the posts I’ve been making about monopolistic platforms. All these giant new age apps, from Facebook and Twitter, down to trading apps like Robinhood and Charles Schwab, purport to be these egalitarian, equal-opportunity platforms, but, as we’ve seen over the past few weeks, they can simply choose to do whatever they want, exactly when people were relying on them to be open and available to them.

Don’t lecture me about how important Twitter was to the “Arab Spring.” First of all, that collapsed, and almost every one of those middle eastern countries in worse shape than before. Second of all, the minute the “other side” became troublesome here in the States, they got the boot. These platforms are not impartial. They’re king makers. And other platforms have watched Twitter and Facebook get away with picking winners and losers in the game of Free Speech, while hiding behind their terms of service, and they are naturally emboldened to do whatever they want too.

And don’t kid yourself, ever TOS you’ve clicked through is legalese for “we can do whatever we want with all of your stuff on our platform, and you have no legal recourse about it if you don’t like it.”

Don’t lecture me about how they’re not monopolies, either. First of all, once a platform like Twitter decides you’re done, everyone else colludes and follows suit. They are de facto monopolies, if not in fact. You have no credible alternatives. Second of all, they’re pulling the rug right out from under you precisely when you need it most. There’s no time to reorganize on another platform. By the time you do, the opportunity will be lost.

These past few weeks have really shown where we’re at as a society. We’re totally dependent on apps now, and they’re all under the control of the wealthy, not even government. This is deeply, deeply wrong.

Discord bans the r/WallStreetBets server – The Verge

Discord says it did not ban the server for financial fraud — rather, it was banned because it continued to allow “hateful and discriminatory content after repeated warnings.” The Verge gained access to the server and can confirm the claim that users of the channel were spamming hateful language, including racial slurs.

Source: Discord bans the r/WallStreetBets server – The Verge

Other shoes are dropping on the GameStop Stock Reddit Bubble. Discord deplatformed /r/wsb because of “hate speech.” A mod of /r/wsb says it was one bad actor fuzzing the language filters on the channel with unicode, and one message was all it took to trigger the ban. That sounds about right.

Then the /r/wsb mods took the sub private for an hour. What was that all about?

Like I said in my previous post, the market is a zero-sum game (in that someone has to lose in order for someone else to win), and the hedge funds with strong short positions in GameStop are taking huge losses. I’d bet a steak dinner that the owners of Discord were getting pressure from (other) wealthy people to find an excuse to shut down /r/wsb’s “command and control” channel, which is organizing a massacre of their investments.

For all intents and purposes, Wall Street investment banks are a de facto branch of the government. I’m pretty certain that ruining some bank’s day with a crowdsourced market “hack” is going to attract the ire of the SEC, no matter how “technically legal” the people on /r/wsb say it is. All it’s going to take is one small flub, like with the Discord ban, for them to step in and start issuing subpoenas.

What I didn’t say in my previous post, I’ll say now. The market is rigged. There are lots of massive players, creating artificial moves, and basically printing money. Some of the most brilliant programmers and mathematicians work on Wall Street. They have some of the most impressive computers and networks on the planet. I read once that one bank, back in the day, installed fiber optics, at massive expense (at the time) from their office to the trading center to improve their latency by double-digit milliseconds. This was enough of an advantage in high-frequency trading that it sounded like they thought it was a no-brainer. These are the people the autists in /r/wsb are up against. People with unlimited resources of money and brains.

The only reason the market works, in general, is because there always has to be people joining the market. If the market looks obviously-gamed, people won’t play. The old adage about leaving your money in the system for 40 years, and collecting about 10% compounded interest has to continue to be true, or people will find something else to do with their money, and the whole thing will collapse like the pyramid scheme it actually is. It’s the biggest money-printing machine in the world, and it’s protected by the US government. You don’t have to look any further than the housing crisis to understand that the powers that be will not allow anything to hinder their ability to print money with the machine.

If /r/wsb expects to step out, and manufacture more chaos with other strongly-shorted companies, the people leading the charge are going to find themselves being investigated. Discord says they didn’t ban them for financial fraud. Of course not. They’re not in a position to pass judgement on whether that has occurred. No, they’ll leave that to the feds, and I expect this is already being organized as I write this.

UPDATE: Reading the HN thread about the article, I find this comment, and I’ll repost his repost:

So I was spot on. There’s duplicitousness at work here. Discord is simply doing a favor for the people being negatively affected by this farce.

I note, for the record, that if Section 230 were repealed, Discord would have shut them down for fear of being inculpated in possible financial fraud, as should have been the story.