Weeks after Reddit group r/WallStreetBets shitposted GameStop stock up to more than $400 a share, the Home Monetary Companies Committee pulled all the main gamers in for questioning on Thursday.
The listening to featured:
- Robinhood CEO Vlad Tenev, whose commission-free brokerage platform made WallStreetBets’ GameStop brief squeeze potential — nicely, until it didn’t, and the app froze all meme buying and selling for hours, angering each the meme merchants, lawmakers, and regulators, creating the circumstances for our listening to right this moment!
- Reddit CEO Steve Huffman, who, in his opening remarks, principally simply defined what Reddit is, offering a dictionary-style definition of “subreddits” for lawmakers. After that, he didn’t say a lot else. Nobody was asking him questions!
- Keith Gill, higher recognized by his Reddit pseudonyms, RoaringKitty and u/DeepFuckingValue, who fairly than donning his notorious purple headband, hung it behind him subsequent to an inspirational poster of a cat encouraging us all to “Dangle in there.”
- And Kenneth C. Griffin and Gabriel Plotkin, CEOs of Citadel and Melvin Capital, respectively. We’re not going to speak about them an excessive amount of.
Robinhood was clearly the main focus. The corporate’s app facilitated the r/WallStreetBets January GameStop squeeze till, as Tenev places it, the corporate couldn’t any longer. On the peak of the meme-trading frenzy, Robinhood pulled the plug on widespread shares like GameStop and AMC, prompting lawmakers like Rep. Alexandria Ocasio-Cortez (D-NY) to name for this listening to to research the corporate’s relationships with hedge funds.
At Thursday’s listening to, Tenev tried to dispel these rumors. “We don’t reply to hedge funds,” he stated. “We serve hundreds of thousands of small buyers who use our platform every single day to speculate.”
All through the listening to, Tenev assured lawmakers that Robinhood needed to halt meme inventory buying and selling as a result of its enterprise companions — the clearinghouses that truly carry out the trades — bumped up how a lot cash it might value the corporate to complete them out.
Tenev apologized for pausing these trades and promised to do higher sooner or later — typical remarks from a congressional witness within the scorching seat.
WHAT IT MEANS
For a listening to investigating what occurs when a bunch of Redditors disrupt the US monetary markets, social media’s position within the GameStop squeeze wasn’t actually a serious a part of Thursday’s listening to. However for the lawmakers targeted on the web’s affect in January’s occasions, they appeared deeply involved about how social media discourse may cause real-world issues.
Now, what occurred to the bemoaned online game retailer’s inventory value in January doesn’t even remotely come near the fallout of the pro-Trump riot on the Capitol that additionally happened that month, however it performs into how lawmakers want to regulate social media post-Trump. For instance, earlier this month, Senate Democrats took their first stab at reforming Part 230 by introducing a invoice, called the SAFE TECH Act. Principally, that invoice would open tech corporations, like Reddit and Fb, as much as lawsuits if the platforms host abusive content material concentrating on particular customers.
It was the primary large moderation invoice to drop after the lethal assault on the Capitol, and importantly, it may set the tone for future discussions round regulating tech platforms. That message clearly discovered its manner throughout the Capitol from the Senate into the Home.
Rep. David Scott (D-GA), asking Tenev if Robinhood engages in content material moderation on social media — it doesn’t, and why would it not? — introduced up this line of considering: “This episode [the GameStop-Reddit saga] exposes a critical menace to our monetary system when tweets and social media posts do extra to maneuver the market than materials, respectable data,” Scott stated. “The chance is gigantic.”
Now, Scott’s take might not be mine, however it serves for instance of how lawmakers are tying collectively discussion board discussions and real-world motion.
Responding to at least one lawmaker, I believe Huffman raised an vital counterpoint: “WallStreetBets could look sophomoric or chaotic from the surface, however the truth that we’re right here right this moment means they’ve managed to lift vital points about equity and alternative in our monetary system,” he stated.
This steadiness can be tough to strike if Congress proceeds on laws.
Keith Gill, aka Roaring Kitty, wins 18 trillion bonus factors for this gem in Home Monetary Committee testimony:
— Yaël (@YaelOss) February 18, 2021
The meme inventory listening to’s most viral meme has to return from RoaringKitty’s opening assertion. Final week, a Zoom filter of a cat bought caught on a lawyer’s face earlier than a reside courtroom listening to, and the next video clip grew to become a viral meme. Regardless of going by a cat-related username, Gill appeared to check with the notorious lawyer cat in his opening remarks.
“A couple of issues I’m not: I’m not a cat. I’m not an institutional investor, nor am I a hedge fund,” Gill stated.
It’s not the primary time that white cat filter has been invoked in Congress. Watch a member of the Home Monetary Companies Committee have hassle with Zoom in this Verge story from earlier this month.
WHAT DIDN’T THEY ASK?
Sitting by this listening to, I used to be ready and ready for Huffman to be on the receiving finish of any significant line of questioning, seeing as he was the one witness who leads a social media firm. Reddit might not be as large as Fb, however it’s been on the middle of a few of the web’s ugliest scenes, from /r/creepshots to Gamergate. Nonetheless, Huffman made his opening assertion on the prime of the listening to, and it took round an hour and a half earlier than he stated the rest.
Right here’s what I’d’ve preferred to listen to from Huffman:
- In Huffman’s opening remarks, he stated that Reddit workers acted as “diplomats’’ to assist soothe disagreements inside r/WallStreetBets’ management throughout the peak of the squeeze. Why did Reddit step in in such a manner? Has Reddit ever had comparable conversations with different subreddit moderators? In that case, which subreddits, and why?
- To what extent was r/WallStreetBets’ GameStop brief squeeze a content material moderation difficulty?
Thursday’s listening to was simply the primary in a sequence following the Reddit-GameStop brief squeeze. Chair Waters stated in an interview with MSNBC’s Stephanie Ruhle Thursday that she plans to carry two extra hearings earlier than ending the committee’s investigation. It’s not clear when these further hearings, one being an knowledgeable listening session and one other specializing in laws, are scheduled to happen.
The Senate Banking Committee, chaired by Sen. Sherrod Brown (D-OH), additionally stated final month that it would hold a hearing on “the present state of the inventory market” within the wake of the unprecedented market volatility round GameStop and different meme shares. Nonetheless, Brown has but to make any official bulletins concerning that listening to or any further actions the committee could take.
However in a flurry of letters Thursday morning, Banking Committee member Sen. Elizabeth Warren (D-MA) began taking measures into her personal palms. Warren wrote to the Monetary Business Regulatory Authority, or FINRA, prompting the body to research Robinhood’s relationship with Citadel and asking it to make sure that retail buyers aren’t deprived by these relationships.
And naturally, the Securities and Trade Fee is at the moment investigating the GameStop saga by itself. In an interview with CNBC Thursday earlier than the listening to, SEC Chair Hester Peirce didn’t present a lot data on how the SEC plans to reply, however he did counsel short-selling limitations could also be within the combine.