> When you transfer money in, Robinhood doesn’t actually get that money until a couple days later. They allow you to buy stock immediately, but that happens (transparently) on margin. Robinhood is loaning you the money to make it happen.
Then they can reduce the purchasing power for certain stocks to just the money already transferred.
There are additional capital requirements for brokering stocks, as mandated by regulations including Dodd-Frank, that made it extremely expensive to handle GME trades during the frenzy.
I know the popular narrative is that this was some sort of conspiracy, but the truth is likely far more banal. Unprecedented volatility and volume are exceeding the limits of these systems. No one budgeted for a single stock dominating news headlines and swinging wildly while millions of retail investors tried to enter at the exact same time.
Then they can reduce the purchasing power for certain stocks to just the money already transferred.