FTX Reportedly Interested In Buying Robinhood Amid Crypto Winter Conditions

The FTX platform is reportedly planning to buy Robinhood. (photo: screenshot)

JAKARTA - Cryptocurrency exchange FTX, reported by Bloomberg, is considering acquiring trading platform Robinhood. A source close to the plan told Bloomberg that FTX is still considering the possibility and has not made an official offer.

When asked about a possible purchase, FTX CEO, Sam Bankman-Fried, stated that the company is not currently in the process of trying to acquire Robinhood.

"We are excited about the prospects for Robinhood's business and the potential ways we can partner with them," Bankman-Fried said in a statement to Bloomberg. "Therefore, there are no active M&A (mergers and acquisitions) conversations with Robinhood."

When The Verge contacted FTX for comment, FTX did not want to respond. Meanwhile, Robinhood refused to comment on the news.

In May, Bankman-Fried disclosed its 7.6 percent stake in Robinhood, which was valued at about $648 million at the time, according to an announcement from the Securities and Exchange Commission 13D.

This type of filing is used when someone acquires more than 5 percent of a company but can also signal a potential takeover. Robinhood CEO Vlad Tenev and CCO, Baiju Bhatt, both own about 8 percent of the company and, as Bloomberg notes. They also control more than 50 percent of the company's voting rights.

Robinhood's own stock rose 12 percent following news of a potential acquisition. Yet today cryptocurrencies, and stocks in general, are falling in value. In fact, many people call this period the "crypto winter".

The role of Bankman-Fried and its FTX exchange was critical in providing bailouts to struggling blockchain companies. FTX provided a $250 million (IDR 3.7 trillion) revolving credit to crypto trading platform BlockFi, and Alameda Research Bankman-Fried has also lent $500 million (IDR 7.4 trillion) to crypto broker, Voyager Digital.

Widespread economic uncertainty has affected Robinhood's business. In its latest revenue report, its monthly active users fell 10 percent to 15.9 million in March 2022. This is a far cry from 17.7 million users in March 2021. Its revenue also fell 48 percent year-on-year, from 522 million US dollars (IDR 7.7 trillion) to USD 299 million (IDR 4.4 trillion).

Robinhood has become a popular crypto trading platform among young investors thanks to commission-free trading, as well as the availability of traditional stocks and crypto-based investments. They have been working to expand its crypto offerings since first launching the option in 2018 and launching its own cryptocurrency wallet earlier this month.

The company went public last year after exiting a stock meme wave that sent AMC and GameStop shares soaring. According to Bloomberg, Robinhood has lost about three-quarters of its market valuation since then, which currently stands at $7.4 billion.