Robinhood
FTX is one of the largest and most well-capitalized crypto brokers. An interesting fact is that as of May 2022, the company only had about 30 engineers and less than 100 employees total, while sporting a valuation of $32 billion.
It's also using this market distress as a way to increase its influence and market share as it's offered credit facilities to some lenders that had to freeze withdrawals. There were many who felt that these conditions are too onerous as a violation of this credit agreement would essentially hand over the entire company to FTX and wipe out current equity holders.
As a result, it looks poised to purchase BlockFi for $25 million after extending a $250 million credit line to the embattled lender. This is 99% below its previous $4.8 billion valuations which means that nearly every investor was wiped out.
FTX also made overtures to Celsius, another crypto lender for a similar deal. However, Celsius' investors which include some high-profile names in the space like Anthony Pompliano and Mark Yusko, are likely to reject the deal, as they look to inject capital without diluting equity holders.
Of course, BlockFi and Celsius are almost like a preview to the main event - FTX's interest in buying Robinhood. FTX started its crypto trading platform because it was unsatisfied with the current offerings, and it wanted a place where traders could structure complicated strategies while maintaining a user-friendly interface.
FTX has been remarkably successful in doing this and has quickly scaled higher. Acquiring Robinhood would instantly give the company millions of users that would take years to achieve otherwise.
Already, Sam Bankman-Fried owns 8% of Robinhood. In public statements, he expressed admiration for the company but dismissed that any sort of M&A deal was in the works.
