More projects have been produced in recent years to make the financial world democratic. Companies working in this field aim for amateur investors to have the same opportunities as hedge fund managers and institutional investors so that the players in the ecosystem operate on equal terms.
While moving towards this goal, many successes have been achieved. Buying stocks is now much easier than it was a few years ago. The Internet has solved the hidden points of the stock markets. Everyone can make technical analysis on their own and generate ideas about current developments. With the widespread use of stocks, costs also fell.
Robinhood, named after the famous figure of British literature working to give the rich to the poor, is one of the companies that ignite the change in the ecosystem. provided. “
This game-changer initiative spread a message encouraging people to crowdfunding. But this sentiment was hit hard by the emergence of a brief contraction in GameStop shares pioneered by r / Wallstreetbets on the Reddit forum. A group of individual investors took short hedge funds and the stock price drove from $ 20 to $ 483 within weeks.
Robinhood, whose money to cover these transactions was rapidly declining, took the brakes and announced that it had completely suspended its GME stock purchases. Then came the restrictions. This situation sparked backlash among Reddit users. It led the company to be accused of buying hedge funds.
Many lawsuits were subsequently filed. Some even claimed that Robinhood “stole from the poor to give to the rich.” And inevitably, some cryptocurrency enthusiasts have begun researching how decentralized finance and digital assets can eliminate these problems. Both have the potential to democratize the financial world.
Is it a flawed business model?
Robinhood is healing his wounds now. The company’s CEO apologized to his customers in a session he attended and described the situation as “unacceptable”.
However, this is not the first time the trading platform has placed customers in the opposite corner. In December 2020, the U.S. Securities and Exchange Commission accused Robinhood of “failing to search for the most reasonable of the current circumstances when processing customer transactions,” and the company paid a $ 65 million penalty as a result.
The SEC alleged “misleading statements and negligence” about the way the company communicated with its customers. It was alleged that Robinhood’s aforementioned misrepresentations were about transferring orders from customers to companies and receiving payment in return. While the platform’s biggest promise to customers is the ability to trade “no commission,” regulators noted that alternative trading options were used “unusually high”, and trade orders were generally executed at lower prices.
The SEC announced that customers are still at a loss of $ 34.1 million, even taking into account the revenues that users earn without commission. SEC official Joseph Sansone explained: “Robinhood did not work to achieve the best reasonably available conditions in fulfilling customers’ orders. This resulted in customers losing tens of millions of dollars.”
At that time, the company told Cointelegraph that “the terms of the deal are not related to Robinhood’s current working structure.”
The best alternative crypto-powered platforms?
Quantfury aims to solve the problems seen in central trading platforms by offering commission-free trading and investment services. It offers free access to real-time spot prices from global cryptocurrency exchanges.
Platform; It offers stocks, cryptocurrencies, stock-traded funds and futures options. It promises to offer and deliver transparent and honest service. Quantfury’s trading data is digitized and published anonymously on a smart contract. In this way, the authenticity of the volumes on the platform can be easily verified.
It offers a wider range of features compared to the brokerage system. It allows users to take long and short positions, take advantage of guaranteed transactions, and use their account balances with the crypto currency of their choice.
Lev Mazur, founder of Quantfury, is passionate about making the financial ecosystem more efficient. In an article he wrote about the infrastructure of individual trading systems, he wrote: “Billions of dollars are being lost due to distorted trading platforms that provide their users with manipulated asset prices, while doing so, preying on individual investors with visible or invisible commission rates.”
The company says that over the past two years, they have rescued their users as “Quantfurians” from disadvantaged market conditions and made them the masters of their own investment strategies.
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