FTX exchange reportedly acquiring Robinhood

Reports of the possible acquisition propelled Robinhood's shares up 14% on Monday

  • Published:
  • 28/06/2022 01:36 PM

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FTX, the crypto exchange firm founded by crypto billionaire Sam Bankman-Fried, is looking into acquiring Robinhood, the popular trading platform that exposed millions of traders around the globe to Bitcoin (BTC), Ether (ETH), and Dogecoin (DOGE).

As reported by Bloomberg, FTX is currently exploring the possibilities of a possible acquisition and conducting deliberations internally about the same. Although no decision has been made to pursue a takeover, FTX is considered a possibility. According to Bloomberg's source, FTX has yet to approach Robinhood with a buyout bid and may still decide against pursuing a purchase.

Bankman-Fried explained in a follow-up statement to Bloomberg that FTX is enthusiastic about potentially partnering up with Robinhood, but there are still no active discussions regarding the matter. "We are excited about Robinhood's business prospects and potential ways we could partner with them," Bankman-Fried told Bloomberg in an email, "That being said, there are no active M&A conversations with Robinhood."

Around 3 p.m. ET (12:30 a.m. IST), trading in Robinhood shares was put on hold temporarily due to news of FTX's probable interest in taking over Robinhood. About 10 minutes later, trading resumed.

FTX or their CEO have been connected to Robinhood earlier, too. In May, an SEC filing revealed that Bankman-Fried had paid approximately $650 million for a 7.6 percent stake in Robinhood.

The deal was made under another firm owned by Bankman-Fried, Emergent Fidelity Technologies. Bankman-Fried stated that the purchase represented his conviction that Robinhood was an "attractive investment" but that he had no intention of changing or influencing the firm's control.

Robinhood has been struggling since January, with its shares down by almost 50% as the trading platform due to the market collapse that has crushed investors large and small, including the retail "meme stock" traders that made Robinhood a popular trading platform during the COVID-19 outbreak. 

Robinhood has lost three-fourths of its value since it got listed on Nasdaq in July 2021. Though its share value witnessed a jump of 14 percent, it’s still down by 75 percent from its IPO (Initial Public Offering). It announced a $392 million loss for the first quarter in April, with quarterly revenue falling by 43 percent to $299 million. The company also reported a decrease in monthly active users and has let off 9% of its staff, citing rapid personnel expansion that caused overlap in several areas.

As for FTX, there have been no indications of halting its growth even through the current bear market. The exchange recently gave a $250 million bailout offer to Bitcoin lender BlockFi; earlier this month, FTX agreed to buy Canadian cryptocurrency network Bitvo for an undisclosed sum.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash