I wonder if they can actually bust the trades here? That feels unlikely to me. (I don’t know enough about contractual remedies to speculate on whether they can just keep the money in the “flip lands in user’s favor” case.)
Peanut gallery: “Bust trade” has a technical meaning, to tell the counterparty that the trade was in error and pretend it never happened. There are limited circumstances where this is possible. This is different from e.g. “We’re force liquidating these positions.”
I think a broker or marketmaker has in the order of minutes to bust a trade that is "clearly erroneous" and it has to be immediately reported. The exact time period varies by exchange but for example for nasdaq it's 30mins for some trades and 60mins for others https://nasdaqtrader.com/Trader.aspx?id=ClearlyErroneous For the exchanges I'm more familiar with (in Europe) it's less.
The criteria for clearly erroneous trades are incorrect price, size or security though so I don't think this would qualify.
Most likely scenario here is that there is an investigation into fraud and that any gains here get forfeit but users are still required to make good any losses. Separately I would expect RobinHood gets a hefty fine as well.
No chance at this point, traders might have a non-zero risk of a fraud charge of some sort since they are purposefully misrepresenting the value of their account in order to get credit but RH is going to get stuck with the vast majority of the bill.
Peanut gallery: “Bust trade” has a technical meaning, to tell the counterparty that the trade was in error and pretend it never happened. There are limited circumstances where this is possible. This is different from e.g. “We’re force liquidating these positions.”