Robinhood CEO Vlad Tenev explains why GameStop trading was restricted

Robinhood blocked investors from buying shares of GameStop last week only after a W🐟all Street clearinghouse sent the stock-trading startup a dead-of-nig𝕴ht demand for $3 billion to support the trades, CEO Vlad Tenev said.

Under questioning from billionaire Tesla boss Elon Musk, Tenev broke down how Robinhood restricted trading on several “meme stocks” while under pressure from the National Securities Clearing Corporation, a financial institution that clears and settles stock trades between brokers.

“Spill the beans, man — what happened last week?” Musk asked T🐲enev during an on Clubhouse, an audio-streaming app.

“The people demand an answer, and they want to know the details and the truth,” he added.

As Tenev explained, Robinhood has to deposit money with the clearinghouse — commonly known as the NSCC — based on several factors, such as the volatility of🦹 tradin💟g activity and “concentration intro certain securities.”

At 3:30 a.m. Pacific time on Thursday — the morning after Reddit’s WallStreetBets message board sparked a flurry of trading in GameStop and other “meme stocks” — Robinhood received a request from the NSCC for a rou🅷ghly $3 billion deposit, a far larger number than normal, according to Tenev.

“Just to give contex♕t, Robinhood, up until that point, has raised … around $2 billion in total venture capital up until now,” Te✃nev said. “So it’s a big number.”

The NSCC eventuallyಞ lowered the request to $700 million after Robinhood officials outlined a plan to “manage risk” in GameStop and other volatile stocks on Thursday, according to Tene🎶v.

That was why Robinhood temporarily blocked traders from buying new GameStop shares, a move that sparked wideꦡspread ✨outrage and several lawsuits. Robinhood has since allowed its customers to buy limited numbers of GameStop shares and options contracts.

Musk — who expressed support last week for the Reddit forum that’s ♒been waging war on Wall Street short-sellers — said the NSCC should be more transparent about why it asked Robinhood for such a massive deposit.

“I guess peo༒ple really just want to know — if you had no choice, then you had no choice, it’s a gun-to-the-head situation. And then that’s understandable,” Musk told Tenev. “But then whoever put that gun to your head should be will🎶ing to answer to the public.”

“What everyone wants to know is, like, did som🅘ething maybe shady go down here?” Musk asked🌟 the embattled CEO. “It seems weird that you’d get a sudden $10 billion demand, you know, at three in the morning,” he added before Tenev corrected him on the amount.

Tenev replied that he “wouldn’t impugn shadiness to it,” 𝓡noting that the NSCC worked with Robinhood to reduce 🐼the required deposit.

“Is anyone holding you hostage right now?” 🥂Musk wondered in respon🍷se. Tenev tried to reassure him, saying, “No, no, I’m OK.”

Musk grilled Tenev during his debut appearance on Clubhouse, an invite-only app popul🎃ar with the Silicon Valley set that allows users to essentially host their own talk shows. 

Tenev’s drop-in appeared to surprise Musk’s host, tech investor Sriram Krishnan, who had to change the settings to let Tenev speak at Musk’s request.

While Musk seemed sympathetic to Tenev, his explanation didn’t quell the outrage of rookie investors on Reddit’s WallStreetBets forum who helped pump up GameStop’s share price last week.

“Makes him sound incompetent at best. Corrupt as f— at worst,” a user named bahkins313 . 

The NSCC’s parent company, the Depository Trust &; Clearing Corporation, stood by its deposit requirements, saying the Nᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚSCC collects 𒁏money “according to calculations that are set forth in its rules.”

“When volatility increases, portfolio margin requirements increase too, and NSCC clearing members may pass on these costs to their clients, including brokerages that clear through them,” the Depository Trust & Cl🀅earing Corporation told The Post in a statement. “Margin requirements protect the entire industry against defaults and systemic risk in volatile markets.”

Separately, Robinhood said it raised another $2.4 billion from sharehold﷽ers just 𝐆days after existing investors pumped in $1 billion in funding.

The online brokerage in a  on Monday said the round was led by Ribbit Capital, with🔜 participation from existing investors including ICONIQ, Andreessen Horowitz, Sequoia, Index Ventures and NEA.