FTX denies talks of acquiring Robinhood

Cryptocurrency exchange FTX has denied reports that it is in talks to acquire Robinhood Markets, an app-based brokerage. The speculation arose from a Bloomberg News report, which claimed that FTX was considering purchasing Robinhood. The report cited anonymous sources with knowledge of the matter. However, FTX’s founder, Sam Bankman-Fried, said in an email statement that there were no active merger and acquisition (M&A) conversations with Robinhood. Bankman-Fried did state that FTX is excited about Robinhood’s business prospects and the potential ways in which the two companies could partner. Robinhood declined to comment on the matter.

FTX’s U.S. division announced in May that it plans to launch a stock trading platform by the end of the summer. Last week, the exchange acquired Embedded Financial Technologies, which provides custody, execution, and clearing services, for an undisclosed amount. The acquisition will enable FTX to add these services to its equity trading platform.

Last month, Bankman-Fried revealed that he owned a 7.6% stake in Robinhood but had no intention of taking control of the platform. Robinhood’s dual-class shares give its founders control of 64% of the voting shares outstanding, making it almost impossible for any takeovers to occur without their support.

Robinhood has come under pressure this year as trading volumes have eased from the frenetic pace seen in 2021. During this period, retail investors used Robinhood to invest in shares of so-called meme stocks, such as GameStop and AMC Entertainment. However, the slowdown in trading volumes and a sell-off in high-growth technology stocks have contributed to a nearly 50% drop in Robinhood’s shares this year. As of Friday’s closing price, Robinhood had a market valuation of almost $7 billion.

Although FTX’s denial of talks to acquire Robinhood came as a surprise to some, the cryptocurrency exchange has previously provided support to other players during the recent crypto market crash. For example, FTX gave crypto lender BlockFi a $250 million revolving credit facility to help the firm avoid a liquidity crunch.

It is worth noting that Robinhood has faced criticism for its role in the GameStop short squeeze earlier this year, with some accusing the platform of manipulating the market. The company was also fined $70 million by the Financial Industry Regulatory Authority in June for “systemic supervisory failures and significant harm suffered by millions of customers.”