I think the problem for Robinhood here is that their decision has effectively dampened the upward mobility of the stock, which hurts option holders (because IV

I think the problem for Robinhood here is that their decision has effectively dampened the upward mobility of the stock, which hurts option holders (because IV goes down) and long holders (because the stock can't go up as much). So in a way, Robinhood is hurting all the people with existing long-delta and long-vega positions. Many of those people are Robinhood's own customers. I guess Robinhood would have to demonstrate that the position isn't suitable for its customers, or that they couldn't guarantee orderly execution under the stress of a continued barrage of orders and new customer sign-ups. This limitation definitely has an impact on GME stock, which is not good for RH because their own customers are largely the people who lose. You can put whatever you want in your TOS, but if you lose money for your own customers and one of your investors (Ken Griffin) is on the other side of the trade, then you have a huge problem on your hands.