SEC takes action against two meme stock wash traders

consultation businessman male lawyer judge counselor having team meeting 1 scaled

The SEC asserts that the defendants unlawfully gleaned more than $700,000 through a wash-trading scheme that targeted exchanges offering market maker rebates.

The United Stat Securities and Exchange Commission has filed a complaint against two Robinhood users over an alleged wash-trading-based arbitrage scheme that utilized meme stocks.

According to a complaint on Monday, defendants Suyun Gu and Yong Lee took advantage of differing trading fee schedules offered by different retail brokers and exchanges to extract arbitrage while wash-trading.

By trading between venues that offer rebates to market makers and those that do not charge fees to market takers, the SEC estimates they generated more than $1.5 million worth of rebates in total through the alleged wash-trading scheme.

Gu and Lee are believed to have been able to keep nearly half of the rebates as profits, with the commission estimating they profited $668,671 and $51,334, respectively, while wash-trading during February through April of this year. The pair are believed to have executed 11,400 and 2,300 trades through the scheme, respectively.

The pair are accused of targetting put options contacts for popular meme stocks including GameStop (GME) and AMC Entertainment (AMC). According to the complaint:

“Gu and Lee Believe that other marker participants’ interest in buying ‘meme stocks’ and related price increase would make put options on those stocks less attractive, making it easier for Gu and Lee to trade with themselves.”

While the trading venues used by the pair are not explicitly named in the court documents, it appears the pair were using the popular fee-free investment app Robinhood. The documents state that Gu concocted the scheme after watching the CEO from “Broker-dealer B” outline in a February court testimony that his firm does not charge taker fees to its customers — the same month that Robinhood CEO Vlad Tenev testified before congress regarding market volatility related to GME and other meme stocks.

Related: SEC is ‘open to discussion’ when it comes to crypto: Kraken chief lawyer

So-called “meme stocks” like AMC and GameStop became widely popular as a result of the Robinhood- and Reddit-based pump-and-dump group r/Wallstreetbets saga earlier this year.

Robinhood was the subject of controversy in January after the platform halted trading on GME amid the notorious short squeeze against hedge funds that was led by the fiery-eyed Reddit community r/Wallstreetbets.

The group responded by immediately converging on crypto, with Dogecoin (DOGE) pumping by 980% on Jan. 28 — the same day that Robinhood acted to dampen the frenzied meme stock speculation.

Robinhood has since estimated that Dogecoin accounted for 62% of its crypto revenues during Q2.

Ronnie Huss

Ronnie Huss

Leave a Reply

Your email address will not be published. Required fields are marked *

Share:

Share on telegram
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Related Posts

bitcoin
Bitcoin (BTC) $ 62,910.86
ethereum
Ethereum (ETH) $ 3,063.00
tether
Tether (USDT) $ 1.00
bnb
BNB (BNB) $ 546.94
solana
Solana (SOL) $ 134.57
usd-coin
USDC (USDC) $ 1.00
staked-ether
Lido Staked Ether (STETH) $ 3,056.71
xrp
XRP (XRP) $ 0.490352
dogecoin
Dogecoin (DOGE) $ 0.154567
the-open-network
Toncoin (TON) $ 6.34
cardano
Cardano (ADA) $ 0.459582
avalanche-2
Avalanche (AVAX) $ 34.84
shiba-inu
Shiba Inu (SHIB) $ 0.000021
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 62,890.85
tron
TRON (TRX) $ 0.110932
bitcoin-cash
Bitcoin Cash (BCH) $ 483.38
polkadot
Polkadot (DOT) $ 6.63
chainlink
Chainlink (LINK) $ 13.39
matic-network
Polygon (MATIC) $ 0.699889
litecoin
Litecoin (LTC) $ 77.53
internet-computer
Internet Computer (ICP) $ 12.20
leo-token
LEO Token (LEO) $ 5.86
near
NEAR Protocol (NEAR) $ 5.09
uniswap
Uniswap (UNI) $ 7.10
dai
Dai (DAI) $ 0.999706
first-digital-usd
First Digital USD (FDUSD) $ 1.00
ethereum-classic
Ethereum Classic (ETC) $ 26.17
aptos
Aptos (APT) $ 8.84
mantle
Mantle (MNT) $ 1.13
blockstack
Stacks (STX) $ 2.49
okb
OKB (OKB) $ 58.44
bittensor
Bittensor (TAO) $ 511.50
crypto-com-chain
Cronos (CRO) $ 0.126017
filecoin
Filecoin (FIL) $ 5.96
render-token
Render (RNDR) $ 8.31
cosmos
Cosmos Hub (ATOM) $ 8.05
stellar
Stellar (XLM) $ 0.106866
arbitrum
Arbitrum (ARB) $ 1.13
vechain
VeChain (VET) $ 0.039826
maker
Maker (MKR) $ 3,077.72
hedera-hashgraph
Hedera (HBAR) $ 0.078823
immutable-x
Immutable (IMX) $ 1.93
kaspa
Kaspa (KAS) $ 0.118491
dogwifcoin
dogwifhat (WIF) $ 2.60
the-graph
The Graph (GRT) $ 0.252181
ethena-usde
Ethena USDe (USDE) $ 1.00
optimism
Optimism (OP) $ 2.19
wrapped-eeth
Wrapped eETH (WEETH) $ 3,171.63
injective-protocol
Injective (INJ) $ 24.36
monero
Monero (XMR) $ 120.65