Flaw in stock trading app lets users borrow huge sums, including one users who received $1 million

A glitch in the mobile stock-trading app, Robinhood, has been dubbed the ‘infinite money cheat code’ after inadvertently lending users exorbitant amounts of trading power.

As noted by Bloomberg, premium users of the app – a mobile platform that lets people buy and sell stocks in addition to options trading – reported that a mere $4,000 deposit has allowed them to take a position worth $1 million.

Yet another user provided evidence that the app let him use a $2,000 deposit to make $50,000 of option calls on Apple stock – the money was subsequently lost, reports Bloomberg.

A glitch documented in the stock-trading trading app Robinhood allows users to infinitely increase the amount of money borrowed from the company which can be used for trading

Pictured above is a screenshot from one Robinhood user who was able to leverage a $4,000 deposit to take on more than $1 million worth of purchasing power

The glitch appears to center on a system flaw with how Robinhood assesses a premium user’s purchasing power – the amount of money one can used to trade stocks or options. 

Premium users who pay Robinhood $5 a month are allowed to use money borrowed from the company, to trade with.

However, users noted that that after they used that money to buy covered calls – a type of option trade that allows one to sell or buy a stock at a predetermined future price – Robinhood incorrectly assessed the value of those calls to their purchasing power.

This means that the more money they borrowed, the more money Robinhood lends them for future trading.

As reported by TechCrunch, Robinhood appears to be actively working to fix this issue, meaning the glitch is likely still ongoing.

‘We’re aware of the isolated situations and communicating directly with customers,’ the platform told TechCrunch in a brief email statement.

Despite being dubbed the ‘infinite money’ cheat by users, the flaw is reportedly a risk for both Robinhood and users.   

Bloomberg also notes that users could be liable for securities fraud for knowingly using Robinhood’s outsize loans to trade with.

Robinhood began letting users engage in options trading recently, including placing calls and puts on stocks

‘If there’s an element of deceit, that you got this by exploiting a loophole in a system, I can see how that could become a securities fraud case,’ Donald Langevoort, a law professor at Georgetown University told Bloomberg. 

‘The other possibility is just the basic common law of restitution. If you take advantage of someone’s mistake to line your own pockets, you need to pay them back.’