Robinhood raised more than $ 1 billion on Thursday to help meet the growing demand from amateur investors who used the stock trading app amid GameStop frenzy, this week.
The brokerage app, which serves many of the investors who raised the Gamestop and AMC prices, had to add cash, in part to pay users for their transactions, reports The New York Times.
Vladimir Tenev, co-founder of Robinhood, said the volatility in the market caused disruption and the company decided to freeze certain transactions.
“We had to make a very difficult decision to protect our clients and our firm,” Tevev told CNN’s Chris Cuomo on 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 go viral on social media,” he said.
“So we’ve never seen anything like it before and manage the risk and the deposit requirements we had to buy to limit these 13 shares with caution.”
Tenev did not mention that the company was seeking a $ 1 billion cash infusion to withstand the storm.
The company, which is private but is expected to go public later this year, has obtained between $ 500 and $ 600 million in credit between six banks, sources told The Times.
The remaining capital was provided by existing investors, the report said.
“This is a strong investor confidence that will help us further serve our clients,” Robinhood spokesman Josh Drobnyk said in a statement to the Times.
On Thursday, Robinhood froze the purchase of shares in GameStop and other companies by the market grid users of Reddit, which caused a great deal of outrage and several lawsuits.
Later that day, the company announced that it would allow a limited purchase of these shares on Friday.