The cryptocurrency exchange is not acquiring Robinhood, but it could contribute to its purchase in the future.

Contrary to some reports, cryptocurrency exchange FTX has zero intentions to purchase the popular brokerage network Robinhood, although they may contribute to its acquisition in the future.

Bloomberg news agency highlighted on Monday that FTX management was internally debating intentions to purchase the trading platform. Sources familiar with the matter told that media outlet that although the exchange had not agreed on meetings with Robinhood, they were seriously thinking about the possibility.

FTX CEO Sam Bankman-Fried later addressed the rumors and denied that the exchange was considering a takeover offer. In an email sent to Reuters, Fried expressed that there are no active M&A discussions with Robinhood.

FTX and Robinhood Could Work Together

According to Reuters, Robinhood counts on a dual-class shareholder structure that gives its founders power over 64% of the outstanding voting shares. This situation makes a potential purchase case impossible without the said approval.

Reports of the alleged takeover arrived right after Sam Bankman-Fried disclosed a 7.6% stake in Robinhood last month. According to a filing with the US Securities and Exchange Commission, the shares had a value of $648 million, and its acquisition took effect at $11.52.

At the time, the CEO of FTX expressed that he considered the platform an attractive investment, but he had no intention of becoming an obstacle for the company. He had also shared some hints on the possibility of contributing to the network.

Shares of Robinhood (HOOD) climbed more than 20% on the May news, a move that happened again this week before the takeover reports. On Monday, HOOD prices reached high peaks of more than 16% after the Bloomberg release, slightly caressing $9.16. However, the most recent statements from the FTX CEO seemed to reverse the trend.

Expansion Strategies

The news arrived amid a downtrend in Robinhood’s business, which has experienced a trading volume decline since 2021 when retail investors conglomerated in the network to pump funds into so-called meme stocks amid the frenzy over GameStop and AMC Entertainment.

That slowdown, adhered to the broader bearish trend seen in high-growth tech stocks and the comprehensive stock market, has led to a nearly 50% crash in Robinhood shares this year, as Reuters reports. The entity counted on a market valuation of at least $7 billion at Friday’s closing price.

According to this situation, Robinhood focused on its digital asset services, where it has observed an increase in revenue. After four years of exploring the crypto environment, the network is now trying to expand its tentacles in this sector. Among the developments, Robinhood is working on a multi-functional wallet for digital assets.

Meanwhile, FTX also intends to set an expansion in the stock trading field. The US arm of FTX revealed in May that it would release a stock trading network by the end of the summer. The firm acquired partner Embedded Financial Technologies last week, which would include custody, execution, and other curious features to its brand new network.

By: Jenson Nuñez

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