One of the biggest names in cryptocurrency is betting on individual investors. Sam Bankman-Fried, CEO of cryptocurrency exchange FTX, has acquired a 7.6 percent investment in stock and cryptocurrency trading app Robinhood, according to a filing today with the US Securities and Exchange Commission.
The billionaire spent approximately $648 million on stock, making him the third largest shareholder in the trading app. At one point during after-hours trading, the investment company’s shares were up 37 percent. The drop was about 25 percent.
The normal trading session on Thursday marked the all-time low for the stock. Robinhood’s closing price was $8.57, or 76% lower than the July IPO price.
The document indicates that Bankman-Fried made the investment through Emergent Fidelity Technologies. Emergent’s sole director and principal owner is Bankman-Fried.
A 36% rise in Robinhood’s share price occurred during prolonged trading before the shares began to fall. They had risen nearly a quarter from their lowest point. (YouTube capture)
Robinhood an ‘attractive investment’
According to the document, the transaction occurred because Robinhood shares represented an “attractive investment.” The statement said that the intention is to hold the shares as an investment and not to make any effort to change or influence the ownership of Robinhood.
The investment comes at a time when Robinhood’s fortunes and revenues have declined; Just hours before Bankman’s investment announcement, Fried’s Robinhood shares hit an all-time low of $7.71.
When retail investors flocked to the stock market last year, Robinhood added millions of new members. However, he has struggled to retain them; the number of monthly active users fell 10 percent to 15.9 million in March from 17.7 million in the same month of 2021.
At the end of last month, Robinhood laid off roughly 10 percent of its workforce.
FTX vs. Coinbase and Binance
FTX is one of the world’s leading cryptocurrency exchanges, offering derivatives products as well as spot trading for more advanced traders. The exchange has become a competitor to Binance and Coinbase, however it does not operate in the United States.
In April, Robinhood reported that 2 million people on a crypto wallet waiting list were able to send and receive coins that were available on the crypto exchange. She stated that the wallets are not yet available in New York, Nevada or Hawaii.
Robinhood has steadily increased its cryptocurrency offerings. It added Solana, Shih Tzu, Polygon and Compound to the platform last month.
The recent decline in cryptocurrencies is a result of investors’ unwillingness to hold risky assets at a time when the Federal Reserve is taking aggressive action to combat inflation.
A drop in the price of a crucial dollar-pegged stablecoin also rattled the market. On Thursday, Bitcoin crashed to its lowest level since December 2020.
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