Reddit co-founder Alexis Ohanian told Democrat New York Representative Alexandria Ocasio-Cortez on Thursday that short-selling was a "bullshit way to make money."
Ohanian denounced the practice of short selling as "a weak way" to make money, essentially betting on businesses to fail.
"I love seeing people make money because they start a business," Ohanian said. "That business creates value for them, for their employees, for customers. That to me feels like an honest American way to make money."
"I actually think hedge funds or just even the practice of short selling is kind of—it's a bullshit way to make money," Ohanian added. "But to do it in such an insanely leveraged way where you're—you know, they were able to reach numbers where they weren't able to short more shares than even existed."
Ohanian also said that he had never shorted a stock in his investments as an entrepreneur.
Newsweek reached out to Ocasio-Cortez's office for comment.
Ohanian expressed hopes that the online move to purchase the stocks would not wind up benefitting the financial system.
"I think so many Americans are hoping that the little guys, the ones who normally end up picking up the tab, are the ones who will ultimately continue to be empowered and supported and not the banks, not finance, not Wall Street," Ohanian said.
The activity of Robinhood investors was seen as an interruption of the practice of short selling, used by hedge funds to make money for their investors. Short selling happens when an investor borrows shares of a company stock that is expected to decrease in value. The investor then sells that stock. If the stock price falls, the investor repurchases those shares for a lower amount. With the profits, the investor can repay the original lender and keep the remaining money.
On Thursday, Robinhood announced it would block the purchases of some stocks in response to "market volatility." Some lawmakers condemned Robinhood's business decision for not allowing regular investors to purchase stock as they saw fit.
Ocasio-Cortez wrote Thursday that Robinhood's decision to prevent retail investors from purchasing certain stocks should be investigated.
"As a member of the Financial Services Cmte," Ocasio-Cortez tweeted, "I'd support a hearing if necessary."
A class-action lawsuit was filed against Robinhood in the Southern District of New York on Thursday. The lawsuit, filed by a Robinhood user, alleged that "Robinhood's actions were done purposefully and knowingly to manipulate the market for the benefit of people and financial institutions who were not Robinhood's customers."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
