Robinhood reportedly restricts crypto trading temporarily ‘due to extraordinary market conditions’ as Bitcoin and Dogecoin spike sharply

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Robinhood limited cryptocurrency trading due to “extraordinary market conditions” on Friday, CNBC said.

A spokesperson told CNBC customers can still use available deposits in their accounts to buy crypto.

The brokerage’s restriction came as the prices of Bitcoin and Dogecoin spiked sharply on Friday.

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Robinhood limited cryptocurrency trading on its platform Friday following the soaring prices of Bitcoin and Dogecoin, CNBC reported.

“Due to extraordinary market conditions, we’ve temporarily turned off instant buying power for crypto,” a Robinhood spokesperson told CNBC. “Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers.”

Earlier in the day, traders on Robinhood were unable to make new deposits for cryptocurrency purchases. They could buy cryptocurrencies only with the existing deposits in their accounts, which can take five business days to clear, CNBC said.

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The price of Bitcoin surged 15% on Friday to $38,089.94, after Elon Musk changed his Twitter bio to “#bitcoin.” Musk’s tweets have prompted recent frenzies into the shares of video-game retailer GameStop and digital token Dogecoin. The meme-based cryptocurrency that started as a joke soared 336%, to $0.054 on Friday, pushing it into the top 10 cryptocurrencies by market cap, according to data from Coin Gecko.

Robinhood did not immediately respond to Insider’s request for comment.

The platform had also restricted trading of highly volatile stocks like GameStop, AMC, BlackBerry, and others on Thursday before the market open, saying it continuously monitors the markets and makes changes where necessary. It later loosened restrictions and reopened limited buying.

But day traders and some lawmakers sharply criticized the brokerage for leaving its users unable to buy some Reddit-touted stocks. On livestream video service Twitch, Rep. Alexandria Ocasio-Cortez called Robinhood’s decision unacceptable and said more information was needed.

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Robinhood pauses instant buying of crypto currencies amid volatility

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(Reuters) - Online broker Robinhood, which was criticized by customers after pausing trading in some hot stocks on Thursday, said it had temporarily disabled a feature on its app that allows users to buy crypto securities instantly.

“Due to extraordinary market conditions, we’ve temporarily turned off Instant buying power for crypto. Customers can still use settled funds to buy crypto. We’ll keep monitoring market conditions and communicating with our customers,” a Robinhood spokeswoman said on Friday.

Through the “Instant Buying” feature on Robinhood, customers have instant access to funds from bank deposits and proceeds from stock transactions. Instant Buying is a paid feature that allows users to instantly settle transactions.

How risky is Dogecoin? The dangers of buying cryptocurrency on apps like Robinhood

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DOGECOIN has surged in value by more than 300% in the past 24 hours, encouraging amateur investors to get in on the action.

Many will be looking to apps like Robinhood and UStocktrade to help them to invest in the cryptocurrency - but these come with their own risks.

2 Dogecoin was initially created as a joke, a parody of Bitcoin Credit: Alamy

Buying cryptocurrency is a seriously risky businesses too and you must be prepared to lose all of your cash if things go wrong.

They’re highly volatile meaning your cash can go down as well as up in no time at all.

Before parting with your cash, make sure you’ve carried out thorough research and are confident that you can afford to lose your investment.

What is Dogecoin?

Similar to Bitcoin, Dogecoin is a cryptocurrency which was launched in 2013.

Originally invented as a joke by software engineers Jackson Palmer and Billy Markus, the Dogecoin has the image of a Shuba Inu dog as its logo.

It has been marketed as the “fun” version of bitcoin.

2 The value of Dogecoin has rocketed in recent days Credit: CoinMarketCap

Two weeks after its launch, the value of it jumped 300% after China banned banks from investing in cryptocurrencies, according to Investopedia.

Dogecoin then skyrocketed alongside other cryptos during the bubble that peaked in 2017, and it fell with the rest of them over 2018.

At its height, Dogecoin was trading for $0.018 per coin, according to crypto data firm CoinMarketCap.

How risky is Dogecoin?

The Financial Conduct Authority (FCA) recently warned Brits they risk losing all of their cash when investing in cryptocurrency.

Cryptocurrency investments often promise high returns but come with “very high risks”. They’re not protected like other types of investment either.

“If consumers invest in these types of product, they should be prepared to lose all their money,” the FCA warned.

Firms offering other cryptoassets must now be registered with the FCA , and anyone who does invest in cryptocurrencies should check before investing.

But consumers are unlikely to be protected by the Financial Services Compensation Scheme (FSCS), which covers up to £85,000 of your savings if a firm goes bust.

You’re unlikely to take your complaint to the Financial Ombudsman Service (FOS) either, which typically only covers traditional savings and investments if something goes wrong.

5 risks of crypto investments THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies. Consumer protection : Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.

Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. Price volatility : Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.

Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses. Product complexity : The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.

The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. Charges and fees : Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.

Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products. Marketing materials: Firms may overstate the returns of products or understate the risks involved.

Plus, there’s no guarantee that the cash will be converted back into physical money.

Tom Stelzer, investing expert at personal finance comparison site finder.com, said: “While Dogecoin’s sudden rise has captured the attention of many investors, it remains an extremely risky and volatile investment.

“Unlike Bitcoin, Dogecoin was initially created as a joke, and has no real underlying value.”

It comes as Brits have been banned from buying “harmful” types of cryptocurrency investment in the UK.

What are the dangers of buying cryptocurrency on apps like Robinhood?

Platforms like Robinhood and Ustocktrade claim to make investing so simple that anyone can give it a go – though they come with their own risks.

It’s worth noting you can’t use Robinhood in the UK, while Ustocktrade is UK based.

Typically, they offer trading tools, stock tips and even cryptocurrency exchange.

“The danger of buying cryptocurrencies on platforms like Robinhood is that you don’t actually own the underlying asset,” explained Mr Stelzer.

“This means that if you want to move your coins, you won’t be able to do so, and if Robinhood decides to restrict trading at any point, you may find you’re unable to sell when you want.”

Yesterday, Robinhood app stopped trading in GameStop and AMC early on Thursday, causing shares to plummet.

Several Robinhood users reported problems with the platform after the investment company clamped down on the stocks claiming they were too volatile following huge price swings pushed by a Reddit group.

The issues were reported just minutes after Robinhood removed GameStop, AMC and other stocks that are part of the “Reddit Rally” from its app.

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Critics have also argued that Robinhood “gameifies” investing, using tactics employed by addictive gambling apps to encourage users to buy stock.

It sends frequent push notifications to users about their stock positions, and when they make their first trade, confetti “rains down” in the app.

In response, Robinhood has argued that the app’s features “are meant for informational purposes only, and are not intended to serve as a recommendation to buy or sell any security.”