- Robinhood co-CEO Vlad Tenev said the company “had no choice” in its controversial decision to suspend buying but still allow the selling of stocks like GameStop.
- The situation began last week when a group of Redditors largely drove an unprecedented spike in GameStop’s stock price in an attempt to cause major hedge funds like Melvin Capital to lose billions.
- Tenev said Robinhood made the decision to restrict buying because the exponential surge in stock prices resulted in a $3 billion deposit bill from the National Securities Clearing Corporation. Meanwhile, Robinhood had only $2 billion in venture capital.
- “We want to give people the access, so that’s been very, very challenging,” Tenev said Sunday night, “but we… had to conform to our regulatory capital requirements.”
- Tenev added that Robinhood still allowed shares of GameStop to be sold because “people get really pissed off if they’re holding stock and they want to sell it and they can’t, so I think that’s categorically worse.”
Robinhood CEO Explains GME Buying Ban
Since the end of last week, Robinhood co-CEO Vlad Tenev has appeared in numerous interviews in an attempt to explain and justify why his company chose to restrict users from buying new shares of stocks for GameStop, AMC, and more.
“We want to give people the access, so that’s been very, very challenging,” Tenev told Tesla CEO Elon Musk in an exchange on the audio app Clubhouse Sunday night, “but we had no choice in this case. We had to conform to our regulatory capital requirements.”
Part of the reason Robinhood’s decision has been so heavily criticized is because the company still allowed users to sell off their existing shares of those stocks. In essence, that appeared to favor large hedge funds over everyday investors.
“We got a lot of questions about, ‘Okay, you had to restrict buying; why didn’t you also restrict selling?’” Tenev told Musk. “And the fact of the matter is people get really pissed off if they’re holding stock and they want to sell it and they can’t, right? So I think that’s categorically worse.”
While other brokerages also restricted stocks amid an unprecedented surge largely driven by a group of Redditors from the subreddit WallStreetBets, Robinhood’s decision was particularly singled out because many viewed it as abandoning the company’s mission of “democratiz[ing] finance for all.”
In addition to that, many have accused Robinhood of bowing to pressure from hedge funds that it has a relationship with — including Citadel Capital, which helped pump $2.75 billion into the hedge fund Melvin Capital last week after it lost billions from its position in GameStop.
Tenev has now denied this claim multiple times, but nonetheless, criticism has continued.
“Robinhood is supposed to be steal from the rich give to the poor — that’s the story of Robinhood,” podcast host Joe Rogan said on his show over the weekend. “Instead, they are protecting all these hedge fund people and stopping people from doing this.”
For his part, Tenev said the decision was made because the surge in stocks like GameStop resulted in a massive deposit bill from the National Securities Clearing Corporation. While the process is fairly complex, brokerages like Robinhood must make initial deposits to clearinghouses when investors buy stocks.
That deposit, according to Tenev, spiked to $3 billion in the midst of GameStop’s volatility, creating a sizable problem for Robinhood since it had only raised $2 billion in venture capital.
“That essentially explains why we had to mark these symbols position-closing only, and also why we knew this was a bad outcome for customers,” Tenev said. “You know, part of what’s been really difficult is Robinhood stands for democratizing access for stocks.”
In his exchange with Musk, Tenev said Robinhood eventually managed to negotiate that requirement down to $700 million.
Robinhood Eases Trading Limits
Monday morning, Robinhood increased the number of new GameStop shares that users can buy from one to four.
Previously on Friday, Robinhood announced that it would back off from its “no-buy, only-sell” policy and would allow limited trading of GameStop; however, that meant users were restricted to only one new share each.
Robinhood also included 49 other companies on that list — including American Airlines, AMC, and even Starbucks. Sunday, Robinhood backtracked by reducing that list to eight stocks — with AMC and GameStop still among the affected.
While users were restricted from buying more than one new share of GameStop at the time, they could now buy up to 10 new shares of AMC.
See what others are saying: (CNN) (CNBC) (Business Insider)
FBI Names Hacking Group Behind the Shut Down of the Nation’s Largest Fuel Pipeline
- The United States’ largest pipeline, which supplies 45% of the East Coast’s fuel, was forced to shut down Friday following a ransomware attack.
- The company that owns it — Colonial Pipeline — said it hopes to restore service by the end of the week. Only some smaller lines are currently operational.
- On Monday, the FBI officially linked the attack to criminal hackers known as Darkside, which operates along a “ransomware as a service” business scheme.
- On Sunday, the Transportation Department issued emergency declarations in 17 states and D.C. in an attempt to keep supply lines open through the “immediate transportation” of fuel.
What Is Darkside?
The hackers who forced the Colonial Pipeline Company to shut down the country’s largest fuel pipeline on Friday are part of a criminal gang known as Darkside, according to the FBI.
Darkside is a relatively new group that operates along a “ransomware as a service” business model, according to CNBC.
“We are apolitical, we do not participate in geopolitics, do not need to tie us with a defined government and look for our motives,” Darkside said on its website. “Our goal is to make money, and not creating problems for society.”
It added that targeting institutions like hospitals, schools, nonprofits, and government agencies violates its code of ethics. It also claimed it would donate some of the ransom money it’s demanding from Colonial to charity, though some charities have reportedly turned down these offers of dirty money.
Pipeline Shuts Down
When the Colonial Pipeline shut down Friday following the initial reports of a ransomware attack, it was unclear at the time if the hackers had directly crippled the line themselves or if Colonial had voluntarily taken it offline.
Colonial announced Saturday that its own executives had made the decision to take systems offline, with the company saying it did so as a precautionary measure out of fear that the hackers had gained enough information to attack vulnerable parts of the pipeline.
As of Monday morning, that pipeline is still mostly shut down, and only some smaller lines are currently operational as of Sunday night.
“Segments of our pipeline are being brought back online in a stepwise fashion, in compliance with relevant federal regulations and in close consultation with the Department of Energy, which is leading and coordinating the Federal Government’s response,” the company said Monday, adding that it hopes to restore service by the end of the week.
What This Could Mean for Gas Prices
The continued closure of the pipeline could be detrimental if it extends several more days. Not only does it run from Texas to New York, but it also supplies 45% of the East Coast’s fuel. That’s 2.5 million barrels of refined gas, diesel, and jet fuel every day.
“It’s the most significant, successful attack on energy infrastructure we know of in the United States,” energy analyst Amy Myers Jaffe told Politico.
As Wells Fargo analyst Roger Read told CNBC, there are main scenarios that could occur depending on how long Colonial remains dark.
If there is a partial restart by Wednesday, Read beleives there will be “no significant or lasting impacts.”
If the outage lasts 6-10 days, “Refiners may need to reduce the amount of crude oil they process… Inventories will rise in the U.S. Gulf Coast, causing prices to fall, while prices in the East Coast would jump.”
Reede added that if the outage lasts more than 10 days, “Refiners in the Gulf Coast will almost definitely have to reduce their runs,” leading to potentially significant fuel shortages in the Southeast.
In an attempt to avoid those last two outcomes, the Transportation Department issued emergency declarations in 17 states and D.C. on Sunday. Those declarations are meant to keep supply lines open through the “immediate transportation” of fuel; however, these increased supplies aren’t near enough to match the pipeline’s capacity, according to an expert cited in the BBC.
Student Group Selling NFTs of Trump Tweets Will Donate Sales To “Charities He Hates”
- Several students known as Strategic Meme Group are selling over 46,000 tweets from former President Donald Trump as NFTs in a bid to reclaim some of his most controversial messages.
- The students said 100% of the sales will go “to charities [Trump] hates,” including organizations that benefit communities the one-term president targeted on Twitter. For example, sales from Trump’s “ChinaVirus” tweets will go to charities such as the Asian Pacific Fund.
- “As an [Asian and Pacific Islander] person myself, and also our founders Jason Yu and Theodore Horn… Trump’s tweets have had a negative impact on us,” Jackie Ni, Chief Meme Officer of SMG, told Rogue Rocket on Friday. “And so, we were just thinking, ‘Is there a way to get something good out of this? Is there a way that we can potentially benefit the community being harmed?’”
- So far, Ni said the group has raised $9,500 through the sale of 118 tweets.
Trump Tweets for Sale
A group of high school and college students have taken former President Donald Trump’s most controversial tweets and turned them into nonfungible tokens in an attempt raise funds for the groups he targeted online.
“Trump tweets for sale,” their website, drumpfs.io, reads. “100% profits to charities he hates. Environmentally friendly.”
In total, 46,964 of the one-term president’s tweets are for sale on the site, including some of his more racially charged messages.
That includes tweets involving multiple uses of the term “ChinaVirus,” which has been condemned by critics as racist and a contributor to the recent uptick in violence against Asian Americans since the beginning of the coronavirus pandemic.
But the students behind this project, known as Strategic Meme Group (SMG), are hoping to reclaim those tweets by donating their sales to specific charities, including the Asian American Legal Defense and Education Fund and the Asian Pacific Fund.
“We don’t want people to forget about the things Trump did or the things he said,” Jackie Ni, Chief Meme Officer of SMG, told Rogue Rocket on Friday. “This man is really flawed. This man is actually really hateful. If you look at his past tweets, these are not presidential. These are not human honestly.”
“As an [Asian and Pacific Islander] person myself, and also our founders Jason Yu and Theodore Horn… Trump’s tweets have had a negative impact on us,” Ni added. “And so, we were just thinking, ‘Is there a way to get something good out of this? Is there a way that we can potentially benefit the community being harmed?’”
Some of the other tweet-specific charities featured on the site include the Clinton Foundation, Americares, Clean Air Task Force, the American Civil Liberties Union, the Southern Poverty Law Center, Doctors Without Borders, and the National Association for the Advancement of Colored People.
The site also lists a “general fund,” which Ni said is used for tweets that are harder to categorize. Ni said SMG will ultimately hold a vote to determine which charities those sales go toward once the fund reaches a $10,000 threshold.
How Much is a Drumpf NFT?
On the site, Trump’s tweets are divided into four categories: for sale, infamous, deleted, and flagged.
The vast majority of his tweets are being sold for 0.0232 Ethereum, which was valued at around $81 as of Friday morning. Notably, 232 is the number of electoral college votes Trump received during the 2020 Presidential Election.
A smaller subset of Trump’s most infamous tweets, such as “covfefe,” are being sold for 4.5 Ethereum, which was just shy of $16,000 as of Friday morning.
Ni said SMG has already raised over $9,500 through the sale of 118 NFTs since launching the website on April 22. Most of the tweets are ones Ni described as ironically “funny,” as the majority of them include Trumps’s infamously-iconic catchphrases “drain the swamp,” “fake news,” etc.
“And it’s not funny that like we’re laughing with Trump,” Ni told Rogue Rocket. “It’s more like we’re laughing at him.”
Ni said he expects sales to cross the $10,000 threshold soon, and from there, the group will begin the process of determining how to best donate to the listed charities since converting from Ethereum to U.S. dollars involves multiple steps.
What is SMG?
SMG is actually the second political venture for these students.
In 2020, Ni, Horn, and Yu started MemePac, which Ni described as a “youth, Gen Z super PAC” designed to oppose Trump. The group quickly gained significant traction on TikTok with more than 350,000 followers and was even featured in The New York Times.
Ni said much of the inspiration behind Drumpfs, which is a nod to a 2016 John Oliver segment where he highlighted that one of Trump’s ancestral names is “Drumpf,” comes from the recent boom of tweets being converted into and sold as NFTs. In an interview with NowThis, Horn credited Twitter CEO Jack Dorsey’s sale of his first tweet for $2.9 million in March.
Ni told Rogue Rocket that SMG was able to access the full catalogue of Trump’s tweets since they have all been archived by other organizations. As NFTs are still young, there’s little regulation behind them, meaning that the group isn’t barred for selling tweets they never posted themselves.
The advent of NFTs, and more specifically blockchain technology in general, has concerned many environmentalists because of the sheer electrical energy that it requires.
With that concern in mind, Ni said SMG wanted to ensure that it worked to offset carbon emissions generated by its NFTs.
“As a progressive Gen Z group, how can we advocate for a technology and use something that gives so much carbon emissions?” Ni said.
“What we’re trying to do to offset that is that we’re buying carbon offsets [through GoldStandard.org] double the amount generated,” he added.
Washingtonian Staffers Refuse To Publish in Protest of CEO’s Op-Ed About “Risks of Not Returning” To in-Person Work
- Washingtonian editorial staffers refused to publish new content Friday in response to an op-ed their CEO Cathy Merrill wrote about employees who wanted to continue doing the majority of their work remotely, which many viewed as a public threat to their jobs.
- In the op-ed, Merrill suggested that “about 20 percent” of every office employees’ job is to participate in “extras” outside their core responsibilities, including “mentoring more junior people” and “celebrating someone’s birthday.”
- If employees aren’t around to do so, she suggested managers have a “strong incentive” to change an employee’s work status to “contractor” to avoid paying for healthcare, a 401(k) match, and other benefits.
- After widespread backlash, Merrill walked back on her comments in an internal memo to staffers.
Op-Ed Triggers Outrage
Editorial staff at Washingtonian, a DC-based magazine, refused to publish new content on Friday in response to an op-ed their CEO wrote that many staffers viewed as a public threat to their jobs.
Cathy Merrill published her op-ed in The Washington Post Thursday, titled: “As a CEO, I want my employees to understand the risks of not returning to work in the office.”
In it, Merrill expressed excitement about the prospect of returning to work in person but said she was concerned about employees who wanted to continue doing the majority of their work remotely.
She claimed fellow CEOs have told her that older employees are more reluctant to return to the office because they work “from comfortable homes” and are “happy to be relieved of commuting.” Meanwhile, their younger colleagues “have been working from small apartments or their parents’ homes.”
Merrill argued that this was an issue because companies need leaders on site, and she suggested that “about 20 percent” of every office employees’ job is to participate in “extras” outside one’s core responsibilities. This includes in-person activities, such as “mentoring more junior people,” “celebrating someone’s birthday,” and doing other things that “drive office culture.”
If employees aren’t around to do so, she suggested that managers have a “strong incentive” to change an employee’s work status to “contractor.”
“That would also mean not having to pay for health care, a 401(k) match and our share of FICA and Medicare taxes — benefits that in my company’s case add up roughly to an extra 15 percent of compensation,” she continued.
“Not to mention the potential savings of reduced office space and extras such as bonuses and parking fees.”
Merrill also argued that “professional development is hard to do remotely,” and said “being out of that informal loop is likely to make you a less valuable employee.”
She closed her piece by suggesting that those who maintained personal relationships with their bosses would have more job security because “the hardest people to let go are the ones you know.”
The op-ed was met with swift condemnation from fellow members of the media, as well as readers.
They say: “I worry about the erosion of office culture”— Markus Di Mastro (@MarkusDiMastro) May 7, 2021
They mean: “I worry about the erosion of my ability to casually exploit, abuse, and manipulate my employees by making them do stuff completely unrelated to their jobs.”
By Friday morning, The Washington Post had changed the op-ed’s headline to: “As a CEO, I worry about the erosion of office culture with more remote work.”
According to HuffPost reporter Dave Jamieson, “Merrill says she did not write the original headline to her op-ed and expressed to WaPo that she felt it was inaccurate.”
The Post’s Editorial Page Editor Fred Hiatt said in a statement to CNN Business that he asked his staff to change the headline and said “nothing else in the op-ed has been changed.”
The change did little to ease outrage, and on Friday morning, Washingtonian staffers tweeted identical statements announcing their decision not to publish for the day.
“As members of the Washingtonian editorial staff, we want our CEO to understand the risks of not valuing our labor. We are dismayed by Cathy Merrill’s public threat to our livelihoods. We will not be publishing today,” the tweets read.
The staff is not unionized, so the refusal to work is especially notable because it carries extra risks.
CEO Walks Back
The growing outrage prompted Merrill to walk back her remarks in an internal memo to staff Friday, saying “flexible with work schedules and time in the office,” along with health and 401K benefits will not change. She said she is not going to switch full time workers to freelancer status, as she suggested in her op-ed.
“These are critical parts of our culture and also things I deeply, personally believe in,” Merrill said in the memo that reported have since shared online.
“I can and will maintain this strategy because we are a small family-owned company and I can. But I do worry about larger less personal businesses and how that may affect our country. That is precisely why I wrote the piece.”
In an earlier statement, Merrill said, “I have assured. out team that there will be no changes to benefits or employee status. I am sorry if the op-ed made it appear like anything else.”