Changpeng Zhao, popularly known as CZ, CEO of leading cryptocurrency exchange Binance, encourages platforms on implementing Responsible-Trading features after a 20-year-old Robinhood trader commits suicide.
Alexander Kearns, a student at the University of Nebraska took his life upon seeing a $730,000 negative balance on the popular stock trading app Robinhood.
A 20-year-old Robinhood customer committed suicide after seeing a $730,000 negative balance https://t.co/Y5T5iSCAf8 pic.twitter.com/wAdjGd7oNo — Forbes (@Forbes) June 17, 2020
Kearns took up stock investing during the pandemic. Robinhood offers a commission-free trading, a fun and easy-to-use mobile app and even awards new customers free shares of stock. Robinhood Markets, Inc. is a U.S.-based financial services company headquartered in Menlo Park, California. The company offers a mobile app and website that offers people the ability to invest in stocks, ETFs, and options through Robinhood Financial and crypto trading through Robinhood Crypto.
Commission-free trading and zero-minimum balances attract younger customers, many of whom have little understanding of the securities and markets they are dabbling in.
As the Covid-19 stock market swung wildly, Kearns begun experimenting, trading options. Kearns left behind a screenshot of his Robinhood account in his suicide note, showing a negative amount of $730,165.72.
However, in reality, he had over $16,000 earned.
I saw @RobinhoodApp response and can confirm they did reach out. The family isn’t ready to speak yet. Since they can’t release account details here’s the screenshot. pic.twitter.com/uqeDhro7aJ — Bill Brewster (@BillBrewsterSCG) June 16, 2020
Forbes report pointed out that the negative balance “may not have represented uncollateralized indebtedness at all.”
Kearns may not have realized that his negative cash balance that was displayed on his Robinhood home screen was only temporary and would be corrected once the underlying stock was credited to his account.
Changpeng Zhao, CEO of Binance, took to twitter on the importance of trading platforms warning people on responsible trading. He emphasized on putting up an anti-addiction notice, Binance being of the first crypto exchanges to do so:
This is truly a sad story. @Binance is probably one of the first crypto exchanges to implement Responsible-Trading features in our products. Here is a blog article from last month on it: https://t.co/J8Sq6IBhb1 We encourage others to copy. #StaySAFU https://t.co/y3bDak0K8t pic.twitter.com/TFQDXfxytS — CZ Binance 🔶🔶🔶 (@cz_binance) June 19, 2020
Every exchange is responsible for educating its users, as much as it is for enabling user access to the products. In a sense, because exchanges can easily list new projects or tokens, it is more important for exchanges to ensure responsible trading principles are inculcated in its DNA. – binance
The ‘Anti-Addiction Notice’ temporarily bans users due to consecutive losing trades. When a user experiences a losing streak or suffers a heavy loss, Binance continuously reminds them of the risk involved in trading and encourage them to hold back on trading activities.