In brief
- WallStreetBets is the group that has pushed GameStop stock up.
- Its server has been banned on Discord for hosting "hateful and discriminatory content."
- Discord says this has nothing to do with market manipulation.
Discord, a group chat application, has banned the server associated with r/WallStreetBets, the group of dilettante day traders who have banded together to push the price of GameStop stock up over 1,000% in two weeks.
Before this month, WallStreetBets was a little-known subreddit for everyday people to talk about stocks. But, according to Discord, chatter for the group over on Discord was “hateful and discriminatory.”
In a statement to the Financial Times and other media outlets, a Discord spokesperson wrote:
"The WallStreetBets server has been on our Trust & Safety team's radar for some time due to occasional content that violates our Community Guidelines, including hate speech, glorifying violence, and spreading misinformation….To be clear, we did not ban this server due to financial fraud related to GameStop or other stocks."
For those interested, here's the full statement from Discord when I asked if they had taken down any content or banned/restricted users for involvement in the Gamestop saga: pic.twitter.com/MjrACMfH9y
— Hannah Murphy (@MsHannahMurphy) January 27, 2021
While the explanation is plausible, the timing raises eyebrows. The Securities and Exchange Commission, without naming GameStop or WallStreetBets, referenced the situation in a one-sentence public statement today:
"We are aware of and actively monitoring the on-going market volatility in the options and equities markets and, consistent with our mission to protect investors and maintain fair, orderly, and efficient markets, we are working with our fellow regulators to assess the situation and review the activities of regulated entities, financial intermediaries, and other market participants."
And Adena Friedman, CEO of stock exchange Nasdaq (which does not list GameStop stock) told CNBC today there's an open question whether social media-boosted buying sprees fit the regulatory definition of pump-and-dump schemes.
Meanwhile, it’s hard for the public to get a read on what’s going on inside r/wallstreetbets. As of today, the Reddit group is invite-only.
“We are experiencing technical difficulties based on unprecedented scale as a result of the newfound interest in WSB,” the subreddit page now reads. “We 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. WSB will be back.”
This all comes amid a quickly changing landscape for social media and internet forums. Purges of QAnon and alt right accounts on Twitter led users to find safe havens elsewhere, such as on Parler and Gab, but also to messaging apps.
The ability of tech platforms to unilaterally sanction speech, hateful and violent or otherwise, has even some tech CEOs concerned, given the ubiquity of a handful of platforms. Twitter CEO Jack Dorsey, a proponent of Bitcoin, has initiated the Bluesky initiative in a bid to create a decentralized social media standard.
A recently released ecosystem review for Bluesky, authored by former Zcash software engineer Jay Graber, explored federated servers such as Mastodon as well Reddit alternatives such as Aether. Such systems would guard against censorship of groups like WallStreetBets, leaving them free to pump whatever stock they wish in whatever manner they wish.
Consequences—and hedge funds—be damned.
Editor's note: This article has been updated from its original version to provide additional context.