Robinhood drops after trading platform discloses a data breach of 7 million customers and an extortion attempt by hackers

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Robinhood drops after trading platform discloses a data breach of 7 million customers and an extortion attempt by hackers
Robinhood. SOPA Images/Getty Images
  • Robinhood stock fell Tuesday after the company said data on millions of customers was exposed in a data breach
  • The hacker also attempted to extort a payment from the trading platform after the breach.
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Robinhood stock fell Tuesday after the retail trading platform disclosed a security breach that exposed data on millions of its customers followed by an extortion attempt.

A hacker on November 3 obtained a list of email addresses for about 5 million people and the full names of 2 million people for a different group, the company said in a blog post late Monday.

The company, whose growth has been driven by retail investors using its app for commission-free trades on stocks, ETFs, cryptocurrencies, and options, said it contained the attack and that it doesn't believe any Social Security numbers, bank account numbers, or debit card numbers were exposed. There hasn't been a financial loss to any customers as a result of the hack, it added.

But for about 310 customers, the data breach exposed their names, dates of birth, and zip codes, with a subset of about 10 customers having more extensive account details revealed, the company said.

Robinhood stock fell 3.8% to $36.52, near the closed in its July 29 trading debut, at $34.82.

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The hacker "socially engineered" a customer support employee by phone and gained access to certain customer support systems, Robinhood said. Social engineering is a technique used to manipulate people to obtain information about an organization.

"After we contained the intrusion, the unauthorized party demanded an extortion payment. We promptly informed law enforcement and are continuing to investigate the incident with the help of Mandiant, a leading outside security firm," said Robinhood.

While Robinhood has been popular with retail customers, it also angered millions of users this year when it halted buying of GameStop and other meme stocks during a trading frenzy in January fueled by the WallStreetBets community on Reddit.

"Wish I had hood puts," WallStreetBets community member Str wrote in a comment late Monday following Robinhood's breach announcement. "Wrong, it should be calls. Stocks go up on fines & breaches LOL," replied community member mpoozd.

A put option contract essentially works as a bet that an asset's price will fall while a call option contract is used by traders who believe an underlying asset will rise.

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"Karma for staying with hood when you knew better," wrote The_Count_99.

WallStreetBets member hi-imBen noted other companies have had similar hacking issues. "Coinbase, hulu, spotify, equifax, like a dozen undisclosed breaches... Hackers have had my email for a long time. This is short term impact but I know yall are thrilled to overhype the importance of this news so have fun!"

"Maybe someone will hack into my account and do a better job with it than I did…," wrote HeftyResident.

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