Robinhood is a popular financial services company based in the United States, which was launched in 2013. The company’s stated mission is to democratize finance by providing easy access to financial markets and tools to all individuals, regardless of their background or wealth.
Robinhood offers commission-free trading of stocks, options, ETFs, and cryptocurrencies through its mobile app or website. Now let’s have a look at how can investors transfer crypto into or out of Robinhood.
Can users transfer crypto from Robinhood?
Yes, Robinhood allows its users to transfer cryptocurrencies to external wallets. Users can transfer their Bitcoin, Ethereum, and other supported cryptocurrencies to another wallet by using the “withdraw” button.
Like with most exchanges, depositing or withdrawing cryptocurrency from and to a user’s Robinhood crypto account is fairly quick and simple. For security reasons, only account owners will be able to make deposits or withdrawals.
Users must complete identity verification (showing ID or passport) and set up two-factor authentication (2FA) before enabling crypto transactions. If these steps are finished, Robinhood typically enables cryptocurrency transactions within just a few business days. Moreover, users have a limit of sending up to $5,000 worth of crypto or making up to 10 transfers in one day.
See this article to get more information on setting 2FA or a manual on how to send crypto. However, users should stay cautious as brokers and centralized exchanges may complicate the withdrawal plans. For instance, users of the bankrupt exchange FTX lost billions of dollars.
Robinhood once stopped the possibility to buy GameStop stock, which caused a massive selloff of over 70% in a single day. These are the dangers of centralized entities.
GameStop (GME) stock chart, source: nytimes.com
The Robinhood controversy of 2021
In early 2021, Robinhood became embroiled in a controversy that led to a significant backlash from its users. On January 28th, 2021, a group of retail traders on Reddit’s WallStreetBets forum drove up the stock price of GameStop, a struggling video game retailer. This caused a short squeeze that cost hedge funds billions of dollars. The stock pumped from just a few dollars to almost $500 in several months’ time!
Robinhood halted buy orders of GameStop and other “meme stocks” involved in the frenzy, citing concerns about market volatility and the need to comply with regulatory requirements. The move by Robinhood to restrict trading in GameStop and other stocks drew widespread criticism from its users, who accused the company of siding with Wall Street elites against small investors.
Read more: How to start investing in the stock market?
Many users took to social media to express their anger and frustration, and some even deleted their Robinhood accounts and moved to rival platforms. Robinhood’s response to the backlash was mixed. The company defended its decision to restrict trading as necessary to comply with regulatory requirements, but it also apologized for the confusion and frustration caused by the move.
Robinhood’s CEO, Vlad Tenev, testified before Congress in February 2021, where he faced tough questions from lawmakers about the company’s handling of the GameStop frenzy. No serious consequences resulted from this event.
Robinhood is a brokerage company that has become popular thanks to commission-free trading. However, it all changed with the controversy in early 2021. Since then, the number of Robinhood users declined, but still operates normally.
Robinhood faced a backlash from its users over its decision to restrict the trading of GameStop and other stocks involved in a short squeeze and there is no guarantee this will not happen again. That is one of the reasons why anyone holding the cryptocurrencies on the platform should think of withdrawing them to their own wallets.