From what I've read this is bad news for the hedge funds.

The apps blocking sales aren't really their fault (I still don't like RH, but the CEO from Webull actually explained it). They are required by regulations to front a holding% when someone buys a share. You buy a share for $100. They give $100 to the seller and maybe 1-2 dollars to the holding firm for 2 days from their own pocket. Except with GME and these super shorted stock, they fear that the shorters won't be able to pay, and in this case its potentially infinite loss. If people keep refusing to sell and they can't afford their interest, the short is called and they MUST buy. At any price. The system will literally start liquidating assets to buy these shares. If people won't sell and they can't get the shares, the loss is potentially infinite. The clearing house, the place holding the % end up eating the cost. So they raise the required % to 100% of the buying cost. You buy for $100, they give $100 to the sell, they PAY the holding $100 for 2 days. Multiply that by so many shares and attention on these stocks and RH literally ran out of liquidity. They couldn't put the holding % down for the buy orders.

So basically it comes right back to the hedge funds. Why were they allowed to make a bet they could not pay back? And the result of this issue actually worked in their favor, they get to fuck over all these app investment platforms while also being able to cover some of their short%. Places like Fidelity have a few reasons why they could still offer buying and selling, they own a large % of these volatile shares, and also are old, established investment giants, fidelity(Company is over 70 years old I believe) has their own closing house for example, and could likely put the money down for the 100% holding cost.