> The biggest problem is Robinhood's poor messaging. It's clear their highest priority was to avoid admission that they were running out of money. They didn't want to trigger a bank run or shake the confidence of their newly acquired users, so they tried to obscure the message as much as possible. As a result, the popular narrative assumed some sort of evil conspiracy theory.
What I don't get is, why is the fear of a bank run relevant? It's a startup and most people seems pretty YOLO about using it. I don't know anything about investor sentiment so I'm genuinely curious - I thought the SIPC covers the FDIC equivalent for RH accounts that show any semblance of trading.
In this frothy market where a bunch of investors barely do due diligence, having collateral problems from too many customers joining too fast sounds like one of those rare "great problems to have," as evidenced by the line of credit they just got extended. Even with the added risk, investors are probably lining up. I was surprised that the CEO didn't go down that line of reasoning for the marketing effect.