Amid a spike in the price of bitcoin and the Dogecoin cryptocurrency, Robinhood limited trading in digital currencies on Friday (Jan. 29).
The company faced client criticism on Thursday (Jan. 28) when it stopped traders from purchasing GameStop, among other equities popular with retail investors, CNBC reported.
The action to limit digital currency trading occurred after Dogecoin jumped as high as 800 percent on Friday (Jan. 29). Dogecoin, which was inspired by a meme, began as a joke. Bitcoin also spiked on Friday when Elon Musk, the chief executive of Tesla, made his Twitter bio “#bitcoin.”
“Due to extraordinary market conditions, we’ve temporarily turned off instant buying power for crypto,” a representative from Robinhood said in a statement sent to the news outlet.
To satisfy increasing cash demands, Robinhood has also landed an infusion of over $1 billion from current backers, The Wall Street Journal reported.
Brokerages such as Robinhood have to keep deposit accounts at clearing firms because there is a delay between the time investors book new equity positions and the time that their funds are exchanged for investments. In more perilous times, clearing companies force brokerages to provide more of their own funds for protection from losses.
Robinhood, among other brokerages, has recently seen a jump in trading volume in a few equities. The move caused clearinghouses to request more funds to cover the transactions. Robinhood landed a fresh investment late Thursday (Jan. 28) to satisfy those needs.
The news comes after it was previously reported that the boom in stock prices of firms like GameStop has garnered the attention of brokers, triggering moves to stem the wild trading activity.
“We continuously monitor the markets and make changes where necessary. In light of recent volatility, we restricted transactions for certain securities to position closing only,” Robinhood said in a blog post on Thursday (Jan. 28).
Shares of GameStop have been popular with members of the WallStreetBets Reddit forum, with investors flooding the market and hiking prices.
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