Free trading app Robinhood has scrapped plans to launch in the UK amid growing criticism of its platform in the US.
Around a quarter of a million Brits on the startup’s waiting list were told by email on Tuesday morning that plans to launch had been suspended. The company said it was “saddened” by the “difficult decision”.
A spokesperson confirmed the UK launch would be postponed “indefinitely”.
“As a company, we are refocusing our efforts on strengthening our core business in the US,” the Robinhood spokesperson said. “We know many people in the UK were excited to invest through Robinhood, and we regret that we cannot deliver our product to UK customers in 2020.”
Robinhood opened its waiting list in the UK in November 2019 and promised to launch this year. The Silicon Valley startup targets millennial investors and has proved hugely popular in the US. The company has over 13 million users and has been valued at $8.6bn (£6.7bn), making it a so-called tech ‘unicorn’. Robinhood has raised over $1bn in funding since founding in 2013.
However, the startup has faced mounting criticism of its business model in recent months. Critics say its game-like interface and easy access to complex products sets users up for large losses and encourages irresponsible trading.
Earlier this month, the Financial Times reported on the apparent suicide of 20-year-old American Alex Kearns, who believed he had run up a debt of almost $750,000 trading complex options on Robinhood. In a note left to his family, Kearns said “no clue about what I was doing” and never intended to “take this much risk”, according to the FT.
Kearns’ cousin Bill Brewster, a financial analyst, told the FT Robinhood was “pushing people into financial dynamite”.
The New York Times has also reported on Robinhood traders losing huge sums and Kara Swisher, an influential tech columnist at the paper, said the company seemed “not just careless but also predatory”.
The coverage has led to pressure on the company from US lawmakers to improve its product.
Robinhood’s founders donated $250,000 to a suicide prevention charity in the wake of Kearns death and said in a blog post last month they were “personally devastated by this tragedy”. The company also vowed to overhaul its options trading business and has made some revisions to its product in recent weeks.
“A lot has changed in the world over the past few months, and we’ve made the difficult decision to postpone our UK launch indefinitely,” a spokesperson said on Tuesday.
“Although our global expansion plans are on hold for now, we’re committed to democratising finance for more people around the world. We look forward to the day when we can bring this mission to the UK.”
Robinhood will retain a small team in the UK, with an unspecified number of job losses. The UK website will be shut and details of around 250,000 potential customers collected through its waiting list will be deleted in line with local privacy laws.