Digital currency trading app Robinhood is reportedly seeking a fresh injection of cash from investors, following significant technical difficulties in March resulting in downtime for a number of its users.
Robinhood users began experiencing problems on March 2, before fresh outages hit on March 9. As a result, the firm now faces a class action lawsuit on behalf of traders who were unable to change or execute orders during the downtime.
Since the middle of March, Robinhood has been engaged in compensating users affected by the problems. The latest funding round is seen in part as an attempt by Robinhood to shore up its reputation, as well as providing additional firepower for meeting the ongoing legal challenges arising from the latest outages.
While the firm is known to have been engaged in compensating its users, it has yet to declare how many of those using the platform were impacted by the technical problems. The outages have widely been seen as embarrassing for the company, with many of its users unhappy at being denied access to their accounts during the period of the outages.
The firm is reported to be raising funds at a valuation of $8 billion, and will turn to existing investors Sequoia Capital for securing the finance. However, the process is not yet a done deal, with negotiations in progress and expected to continue over the coming days.
It comes amid a period of record growth for Robinhood during the coronavirus pandemic, with revenues tripling from the same month last year. Revenues for March were reported at $60 million, up from $20 million in March 2019.
The growth has been driven by a surge in new signups during the pandemic, at a time of significant market volatility in the digital currency sector, as more traders look for ways to capitalize on moving digital currency prices.
With the funding package still being thrashed out, it remains to be seen whether this latest round of capital can help shore up the app’s increasingly shaky reputation with its users.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.