UPDATE: The subreddit WallStreetBets was privated and then unprivated, with their Discord server banned, as the community pulls off a successful short squeeze on GameStop stock.
WallStreetBets was involved in a short squeeze of GameStop and other stock this week, screwing over hedgefunds that had bet against the company, with users seeing massive profits, and the investment bankers on Wall Street losing billions. As National File reported:
In response, the users of the subreddit saw a perfect opportunity to “own” the hedgefunds, as the newsletter from Left allegedly noted some of them buying GameStop stock. By buying GameStop stock, they could initiate a “short squeeze,” sending the price of the stock up, and forcing the hedgefunds to buy more of the stock to cover themselves…
The stock was then bought enmasse, with GameStop ending up as the most traded equity on the planet on Tuesday, beating out Apple, Tesla, and Microsoft. As a result, the price skyrocketed by hundreds of percent, and one of the hedge funds, Melvin Capital Management, had to be bailed out for $2.75 billion…
One Wall Street hedgefund trader told the New York Post that the situation was a “bloodbath,” and expressed his frustration that the “unwashed masses have figured out how to play the shorts” and beat them at their own game. “It’s f**king carnage,” he added.
However, the fun wasn’t allowed to last for long. On Friday evening, the Discord server was the first to go, with Discord claiming that “hateful and discriminatory content” was allowed to be posted on the server, and that after “months” of warnings, they coincidentally decided that now was the time to remove it. “The server has been on our Trust & Safety team’s radar for some time,” the statement reads:
To be clear, we did not ban this server due to financial fraud related to GameStop or other stocks. Discord welcomes a broad variety of personal finance discussions, from investment clubs and day traders to college students and professional financial advisors. We are monitoring this situation and in the event there are allegations of illegal activities, we will cooperate with authorities as appropriate.
Around 30 minutes after the news came out regarding the Discord server, the original WallStreetBets subreddit was set to private, meaning only approved users could post and see the content. In a statement posted to the subreddit, the moderators said that they are “experiencing technical difficulties based on unprecedented scale as a result of the newfound interest in WSB.”
The modertators added that they “are unable to ensure Reddit’s content policy and the WSB rules are enforceable without a technology platform that can support automation of this enforcement,” adding that they will be back.
BREAKING: r/WallStreetBets has gone private within the last few moments pic.twitter.com/qMCZaAaxu0
— Jack Hadfield
(@JackHadders) January 27, 2021
The subreddit was in fact unprivated within the hour, and a statement posted by the mods to the community, claiming that they were “suffering from success,” with their Discord server being the first casualty:
We have grown to the kind of size we only dreamed of in the time it takes to get a bad nights sleep. We’ve got so many comments and submissions that we can’t possibly even read them all, let alone act on them as moderators. We wrote software to do most of the moderation for us but that software isn’t allowed to read the Reddit new feed fast enough and submit responses, and the admins haven’t given us special access despite asking for it…
You know as well as I do that if you gather 250k people in one spot someone is going to say something that makes you look bad. [The Discord server] was golden and the people that run it are awesome. We blocked all bad words with a bot, which should be enough, but apparently if someone can say a bad word with weird unicode icelandic characters and someone can screenshot it you don’t get to hang out with your friends anymore. Discord did us dirty and I am not impressed with them destroying our community instead of stepping in with the wrench we may have needed to fix things, especially after we got over 1,000 server boosts. That is pretty unethical.
The statement also slammed Twitter accounts that had been set up that claimed to be affiliated with the subreddit, and linked to their official account on the site, so that they can directly respond to people, including reporters who may be “lying to the world about our clubhouse.”
In one of the last posts posted onto the subreddit before they shut down, one user proclaimed that they had a message for anyone in the SEC who may be investigating the subreddit. “Go f**k yourself,” they said. “Why don’t you start investigating why companies can shut down trading so their hedge fund buddies don’t lose money? But when people lose money it’s completely ok. Eat a dick.”
wallstreetbets has a message for the SEC pic.twitter.com/U1xrwT7Ppy
— Rod Breslau (@Slasher) January 27, 2021
This is a breaking story, and may be updated with further information.