- Discord banned its chat group r/wallstreetbets on Wednesday for repeatedly allowing hate speech.
- The group's Reddit counterpart has fueled a massive rally of GameStop, AMC, and Nokia shares.
- Discord's ban coincided with the group having technical issues with its Reddit forum.
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The group-chat platform Discord on Wednesday said it had banned the r/wallstreetbets server for repeatedly violating its policies against hate speech.
"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. Over the past few months, we have issued multiple warnings to the server admin," a Discord representative told Insider.
"Today, we decided to remove the server and its owner from Discord for continuing to allow hateful and discriminatory content after repeated warnings."
The overlapping online community Wall Street Bets has risen to prominence in recent days, with the Reddit forum r/wallstreetbets fueling massive volatility in the stock market by driving up share prices for GameStop, AMC Theatres, and Nokia.
While the Wall Street Bets community originated on Reddit, its members have set up a group, known as a server, on Discord where they also discuss stock-trading plans.
Discord's ban came as the Wall Street Bets subreddit had been experiencing on-and-off technical issues - including becoming invite-only for about an hour, according to The Verge - as new users flocked to it. The timing of the ban may have briefly made it more difficult for members to discuss trades.
Moderators of the Reddit community slammed the move.
"We're suffering from success and our Discord was the first casualty," they wrote in a Reddit post Wednesday. "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. That room was golden and the people that run it are awesome."
They added (emphasis theirs): "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."
But Discord said its decision wasn't connected to the group's discussion of trading activity.
"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," the company representative said. "We are monitoring this situation, and in the event there are allegations of illegal activities we will cooperate with authorities as appropriate."
The trading activity generated in large part by the Wall Street Bets community has wreaked havoc on traditional Wall Street firms, causing GameStop short-sellers alone to lose more than $5 billion on their positions.
The stock market volatility caused the Biden administration to chime in Wednesday.
The White House press secretary, Jen Psaki, said at a news conference that Treasury Secretary Janet Yellen was among those "monitoring the situation."
Financial regulators and the companies that operate the financial markets have also been keeping a close eye on the situation.
Nasdaq CEO Adena Friedman told CNBC on Wednesday that the exchange monitored social-media chatter and would halt trading if it matched the chatter with unusual activity in a stock.
The brokerage firm Ameritrade also restricted trading in light of the massive volume sparked by Wall Street Bets.
"In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC, and other securities. We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors," Ameritrade said in a statement Wednesday.
GameStop, AMC, and Nokia were all down slightly in after-hours trading.