Billionaire founder and CEO of cryptocurrency exchange FTX, Sam Bankman-Fried, has acquired a 7.6% stake in popular online brokerage Robinhood.
The news was well-received by the market and shares of Robinhood (HOOD) initially surged more than 30% in after-hours trading. As of this writing, the price has stabilized at an overall profit of 24%.
According to securities filings filed with the Securities and Exchange Commission on Thursday, Bankman-Fried bought Robinhood stock for a total of $648 million at an average price of $11.52. The purchases disclosed by Bankman-Fried reportedly began in mid-March and continued through Wednesday.
In his securities filing, Bankman-Fried made it clear that he had no intention of taking any action to change or affect the control of the company. [Robinhood],” and made this move because he saw Robinhood as an “attractive investment.”
Robinhood’s communications team told Bankman-Fried to 82,000 followers, “Of course we think it’s an attractive investment.”
Of course, we also consider it an attractive investment. We have the best customer base, we’re launching great new products, and we have a team to deliver.
— Robinhood Communications (@RobinhoodComms) May 12, 2022
The transaction was executed by an Antiguan company called Emergent Fidelity Technologies Ltd, to which Bankman-fried is the sole director and major shareholder.
The announcement appears to have provided short-term relief to Robinhood investors after the stock reached an all-time low of $7.73 on March 12, just a day after the brokerage firm announced that cryptocurrency trading revenue fell 39% year-over-year. -Year (YOY).
Robinhood has made significant strides in the cryptocurrency market as returns from stock-related trading have plummeted. Robinhood currently offers crypto trading capabilities to its users, enabling immediate competition from other US-based cryptocurrency exchanges such as Coinbase and Gemini.
According to Robinhood’s Q1 2022 reportWhile approximately 18% of Q1 net sales came from cryptocurrency-related transactions, cryptocurrency-based sales were down 39% to $54 million compared to $88 million in Q1 2021.
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In April last year, Robinhood announced plans to expand into a cryptocurrency brokerage by acquiring UK-based cryptocurrency company Ziglu.
Earlier this month, Robinhood launched a highly anticipated cryptocurrency wallet to its 2 million waitlisted users, outlined plans to integrate Lightning Network, and listed Shiba Inu (SHIB) after months of campaigns from supporters.