Robinhood Found To Be Stealing From The Poor, To Give To The Rich
Robinhood, the cryptocurrency trading platform have been found to be doing the exact opposite of the Robin Hood philosophy, according to research by Logan Kane of Seeking Alpha. If youâre not au fait with British history, hereâs some facts about the real Robin Hood according to the BBC:
âThe Robin Hood legends form part of a corpus of outlaw stories which date from around the reign of King John. Two other key outlaws, Fulk fitzWarin and Eustace the Monk, were historical figures whose lives can be clearly identified at this time, but Robin Hood himself is much more problematical. Eustace the Monk and Robin Hood are the gadflies of authority, who turn injustice on its head. They may not rob the rich to feed the poor, but they do beat the strong to help the weak. This explains the enduring popularity of the Robin Hood legends; they are the little man's way of striking back.â
The Robin Hood philosophy, is simply stealing from the rich to give to the poor, though by historical records, the person most likely to be âRobin Hoodâ didnât really steal from the rich to give to the poor as such, but they did take on the strong to help the weak.
Interestingly, Kane has found that in the cryptosphere, Robinhood have done the opposite, they are stealing from younger, less experienced and less wealthy investors and giving the profits to the big dogs and the wall street level investors that are using their platform. According to Bitcoin.com, Kane has said:
âIt seems that todayâs Robinhood takes from the millennial and gives to the high-frequency trader. Not only does Robinhood accept payment for order flow, but on a back-of-the-envelope calculation, they appear to be selling their customersâ orders for over ten times as much as other brokers who engage in the practice.â
âRobinhood not only engages in selling customer orders but seems to be making far more than their competitors from it. Among brokers that receive payment for order flow, itâs typically a small percentage of their revenue but a big chunk of change nonetheless. Robinhood appears to be operating differently.â
Why is this a problem?
The problem here is a lack of transparency from Robinhoodâs part. Now of course, we need to see further evidence from Kane to backup these claims, but it does seem that he has carried out extensive research prior to making these accusations. Robinhood claim to be 100% commission free. They foster this notion that they are giving new investors the opportunity that many larger trading platforms are taking away from them with their high fees and their high commission rates.
Robinhood seems attractive to new investors because its quirky, and even the essence of its name âRobinhoodâ suggests that it has been set up to help the little man, instead of many other exchanges that are designed to simply profit the rich.
Overall, there has been no official response to Kane from Robinhood. Itâs still too early to comment on the full scale of this, however we expect that this is going to inspire a lot of people to run further investigations on the platform. If indeed Robinhood have been ripping off younger investors to profit their bigger customers, we expect that in the next few weeks, a lot of people are going to turn their backs on this exchange.