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Robinhood raised over $1 billion on Thursday to help meet the increased demand from amateur investors using the stock trading app amid this week’s GameStop frenzy, a report said.
The brokerage app, which serves many of the investors who drove up Gamestop and AMC prices, was in the need of the cash infusion, in part to pay out users for their trades, The New York Times reported.
Robinhood’s co-founder, Vladimir Tenev, said the market volatility caused disruption and the company decided to freeze certain trades.
“We had to make a very difficult decision to protect our customers and protect our firm,” Tevev told CNN’s Chris Cuomo Thursday night.
“We are in a historic situation where there is a lot of activity and a lot of buying concentrated in a relatively small number of symbols that are going viral on social media,” he said.
“So we haven’t really seen anything like this before and to prudently manage the risk and the deposit requirements we had to restrict buying in these 13 stocks.”
The company, which is private, but expected to go public later this year, acquired $500 million to $600 million in credit from six banks, sources told The Times.
The remaining capital was provided by existing investors, the report said.
“This is a strong sign of confidence from investors that will help us continue to further serve our customers,” Josh Drobnyk, a Robinhood spokesman, told the Times in a statement.
On Thursday, Robinhood froze purchases of shares in GameStop and other companies boosted by market-roiling Reddit users, a move that provoked widespread outrage and several lawsuits.
Later in the day, the company announced it would “allow limited buys” of those stocks on Friday.
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