Free trading app Robinhood’s disastrous shutdown on Monday and parts of Tuesday was caused by a wave of unprecedented demand on its infrastructure, its co-founders and co-CEOs wrote in a blog post late on Tuesday.
This huge demand was driven by multiple factors, Baiju Bhatt and Vlad Tenev wrote, including “highly volatile and historic market conditions; record volume; and record account sign-ups.”
The heavy load in turn caused the company’s domain name system to fail, rendering its users unable to access the site.
The co-CEOs said the company was working to improve the resilience of its infrastructure, but warned that “as our engineering team works to upgrade our infrastructure, we may experience additional brief outages, but we’re now better positioned to more quickly resolve them.”
On Wednesday morning, Robinhood's status page reported all its systems as being operational.
A spokesperson said that the company is reaching out to customers with information on how to contact Robinhood so they can work with them on a case by case basis to handle compensation for the outages. This may include billing credits.
Separately, the New York Post reported that Robinhood may face scrutiny from the Financial Industry Regulatory Authority (Finra), which requires firms to have a back-up plan for customers to carry out trades in the case of an emergency.
On social media, many customers have also called for pursuing a class-action suit against Robinhood.