Another layer of complexity is that Robin Hood - which briefly prevented investors from buying GameStop shares as the stock soared - has an ongoing business relationship with Citadel.
Citadel, meanwhile, helped bail Melvin Capital out with a cash infusion totaling more than $1 billion. Melvin Capital, if you recall, was the billion-dollar hedge fund that almost went bankrupt due to its extreme short position on GameStop.
News of the investigation comes a few days before representatives from Robinhood, Melvin Capital, and Citadel are set to appear before Congress. The wild saga that saw Redditors pump up GameStop shares by more than 5,000% over the course of a few weeks is now the subject of a federal investigation, according to a new report from The Wall Street Journal. Redditors took advantage of the fact that hedge funds had unusually large short positions on GameStop shares.Over the course of a few weeks, Redditors on the WallStreetBets subreddit mobilized and drove the price of GameStop shares up more than 5,000%.The Justice Department is looking into potential market manipulation regarding the rapid rise of GameStop’s stock price last month.
