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· Posted on
February 21, 2024

STOP THE SPREAD: Massive crypto exchange FTX might be thinkin' about buying Robinhood to stop 'contagion'

Rumour has it FTX wants to buy trading platform Robinhood - and it ain't just about the juicy profits.

What's the key learning?

  • FTX is a trading platform that launched in 2019 - and it's reportedly considering buying Robinhood to squashing financial contagion.
  • Financial contagion is the spread of economic shock from one company/industry/country to another
  • Right now, you could say that financial contagion has started in the crypto markets, which also extends to associated companies, like Robinhood.

👉 Background: FTX is a crypto exchange that was founded in The Bahamas back in 2019. It's now one of the world's biggest exchanges. As of last year, FTX averaged $10 billion of daily crypto trading volume, and they've got over 5 million users!

👉 What happened: Taking over the Miami Heats Stadium and calling it the FTX Arena ain't enough. FTX now wants to buy Robinhood (aka the trading platform that went public last year and has been on a downward spiral ever since).

👉 What else: We should mention that Robinhood hasn’t received a formal takeover notice from FTX as of yet. But experts reckon this is FTX's way of squashing financial contagion.

What's the key learning?

💡Financial contagion is the spread of economic shock from one company/industry/country to another. Given how globalised the world is today, it's easy for a localised financial shock to become globally contagious 🌏.

💡During the GFC, problems in certain parts of the US financial markets turned into a global crisis. Right now, you could say that financial contagion has started in the crypto markets, which also extends to associated companies, like Robinhood.

💡FTX, which has raised $1.8bn since July last year, is offering loans to crypto firms in dire straits (potentially including Robinhood). While it may be a profit-seeking move, it may also just stop some crypto contagion.

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