Webull Follows Robinhood in Blocking GameStop, AMC Trades After Being Suggested as Alternate Trading Platform

Update:
Webull tweeted on Thursday afternoon that GME, AMC and KOSS stocks are no longer restricted.

UPDATE: GME, AMC, and KOSS are no longer restricted.

— Webull (@WebullGlobal) January 28, 2021

Original Story:

With amateur stock traders seeking out alternatives to Robinhood because the popular investment app has blocked users from opening new positions on certain viral stocks, Webull, one of the services floated as an alternative by people on the internet, has followed Robinhood's lead and blocked users from buying new stocks from three companies, including GameStop and AMC.

Webull tweeted that it wouldn't allow people to buy GameStop (GME), AMC (AMC) or Koss Corporation (KOSS) stock on Thursday. It cited the increased market volatility as the reason.

Due to the extreme volatility in the symbols AMC, GME, and KOSS, our clearing firm will no longer be able to support clearance on these symbols. As a result, Webull is forced to set all transactions in these symbols to liquidate only.

(2/2)

— Webull (@WebullGlobal) January 28, 2021

"Due to the extreme volatility in the symbols AMC, GME, and KOSS, our clearing firm will no longer be able to support clearance on these symbols. As a result, Webull is forced to set all transactions in these symbols to liquidate only," the company wrote in a tweet.

As is the case with users on Robinhood, for the moment, Webull users who already own shares in these companies can only sell their shares.

On Thursday, Robinhood announced in a blog post that it was limiting positions on 13 different stocks, including AMC, GME and KOSS. The move upset amateur traders online, including those who had helped drive up the costs of the stocks, and led them to seek out alternatives to Robinhood, including Webull. Webull, among other investment services, experienced outages on Thursday morning, presumably due to the sudden influx of users trying to utilize their services.

Robinhood appears to have added to the number of stocks for which it's limiting transactions. It's unclear if Webull or other providers will follow suit and limit transactions on additional stocks.

Ahead of Webull's announcement that it would limit the transactions on the three stocks, it was a lead competitor with Robinhood.

Can confirm that WeBull is open for trading the companies that Robinhood has deplatformed. Similar commission-free model to Robinhood. I've been using it for over a year and it's a solid platform. https://t.co/ZM1fyvPW1r

— Jordan Schachtel (@JordanSchachtel) January 28, 2021

Our account management team is working as fast as they can to approve all incoming applications. Thank you all for your patience!!

— Webull (@WebullGlobal) January 28, 2021

Now that Webull is also blocking people from purchasing stocks, the company is facing scrutiny on social media that's similar to the criticisms being aimed at Robinhood. Many people responded to Webull's tweets announcing the pause on AMC, GME and KOSS by questioning the legality of blocking people from purchasing the stocks.

How is this legal?! All you brokers going down at the same time today to let the shorts drive prices down. SMD

— J_r0dd (@J_r0dd) January 28, 2021

Lmao the moment people start to switch over too... killing your own business buds ... enjoy the lawsuit I’ll take my money then as well.

— Ocirion (@Ocirion1) January 28, 2021

Some users said that Webull's move could've been predicted.

I see WeBull just did what I said it would do... https://t.co/utMkIvPEHE

— George M Johnson (@IamGMJohnson) January 28, 2021

I didn't want to say anything because I'm not a financial advisor but anyone pushing Webull as an alternative should have seen this coming.

They're all taking order from Wall Street fat cats. Of course the Hedge's are still doing what they want but you know... FREE MARKET LULZ! https://t.co/G5YLbGNP83

— Goldenboy (@GoldenboyFTW) January 28, 2021

Journalist Jordan Schachtel, who recommended Webull earlier in the day, apologized for directing people toward the investment service. He also seemed to imply that people should look to cryptocurrency as an alternative to the stock market. "Anyway, instead of moving your fiat, it's time to start thinking about rejecting the corrupt system as a whole. #Bitcoin," he wrote.

My bad recommending WeBull. Had no idea they were owned by the Chicoms. Looks like they too are in on the hedge fund racket.

Anyway, instead of moving your fiat, it's time to start thinking about rejecting the corrupt system as a whole. #Bitcoin.

— Jordan Schachtel (@JordanSchachtel) January 28, 2021

In an email to Newsweek, Webull sent along a comment from its CEO, Anthony Denier: "As of 11am EST, Webull was forced to stop accepting new opening positions in GME, AMC, & KOSS by our clearing firm. This is due to the elevated collateral requirements set by DTCC [Depository Trust & Clearing Corporation] to settle the trades. It is simply too expensive to settle these trades at the moment. We are working closely with our clearing firm to allow our customers to trade these stocks as soon as possible."

Another Robinhood competitor, Stash, also announced on Thursday that its users will not be able to buy GameStop or AMC shares, due to a halt from its clearing firm, Apex Holdings. Similar to Robinhood and Webull, Stash users who own the shares can still sell their stocks.

Our clearing firm, Apex Holdings, has decided to halt the buying of $GME and $AMC. We are in close contact with the firm and will make sure to keep you informed as soon as we get updates. In the meantime, you can still execute "Sell" orders for $GME and $AMC on Stash.

— Stash (@Stash) January 28, 2021
GameStop Webull Stock Market reddit
General views of GameStop in Hollywood busy with customers waiting in line to enter the video game retailer on January 27, 2021 in Hollywood, California. AaronP/Bauer-Griffin/GC/Getty

Updated 1/28/21, 1:35 p.m. ET: This story has been updated to include Stash halting users from buying GME and AMC.

Updated 1/28/21, 2:47 p.m. ET: This story has been further updated to indicate that Webull has lifted restrictions on the stocks.