FTX CEO Sam Bankman-Fried purchased a 7.6% stake in the Robinhood market. On the back of this news, Robinhood shares rose 28%.
The crypto entrepreneur acquired 56.28 million shares of Robinhood for $648.29 million. The transaction took place through Emergent Fidelity Technologies, a company affiliated with Bankman-Fried, according to the U.S. SEC filing.
The acquisition happened just after corporate crypto exchange Coinbase denied rumors of a possible merger with Robinhood earlier this week.
Despite disappointing financial results, a further stock market dump and rumors of possible bankruptcy, top Coinbase executives made a statement during a phone call that they are not planning any fundamental changes on whether or not to acquire or merge with Robinhood.
Long story short, now the biggest stake of one of the most popular and hyped online brokers of the United States is in the FTX CEO's pocket.
Why is everyone on the hunt for Robinhood?
Robinhood is an online brokerage start-up that allows its users to trade on the market without commissions.
Its ease of use has simplified the access of ordinary people to trading. Quick remote registration and absence of fees and commissions led to the fact that unqualified investors rushed to the market.
The main audience of the start-up is millennials, with the average age of clients at 31, and for almost half of them, Robinhood was the first investment platform in their lives.
Robinhood's popularity emerged during the quarantine that kept people locked up at home. In the first four months of this year, the app gained more than three million new customers, and there are now more than 13 million total. Then there was the saga of Reddit users, who used Robinhood as their main platform for pumping and dumping stocks, causing major hedge funds' short squeezes and bringing then numerous headaches in the process.
As of May 2022, Robinhood has suffered a significant decline in net revenue and a decrease in trading activities. Nevertheless, the millennial-force broker continued to plot and expand and even listed crypto trusts from Grayscale based on Bitcoin and Ethereum.
FTX CEO acquiring the stake should bring more sustainability and reliability to the project, and then it will definitely result in the improvement of key indicators.