Robinhood’s crypto trades are powered by Jump Trading: report

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Robinhood has become the darling of not only the online stock trading community but the cryptocurrency community as well. The company enabled crypto trading in February 2018, and, according to a report by Bloomberg, it had to partner with a Chicago-based trading firm, Jump Trading LLC, to execute the orders.

Jump Trading LLC is a brokerage firm that started in 1999. While it’s not one of the most renowned, it has been making hundreds of millions of dollars for the past two decades. According to the report, the firm was one of the early movers to crypto, and it has been raking in huge profits from its move. Sources told Bloomberg that Jump has traded cryptos since November 2017, just before the crypto boom.

While Robinhood runs the crypto trading platform, it can’t execute the buy and sell orders for its clients. It must have a brokerage firm for that. With its stock trading business, which is its primary field, it turns to established brokerage firms such as BofA Securities, formerly known as Bank of America Merrill Lynch. However, with cryptocurrencies, it couldn’t as many of the big firms haven’t started offering crypto trading services. It thus turned to Jump Trading, the report revealed, citing people with knowledge on the matter.

Still, Robinhood has been the biggest gainer from the venture, one that cemented its place as the financial app for the millennials. The company explored a new model when it was launched in 2013 which allowed its users to trade at zero fees. This attracted many young investors, pushing its transaction volume to $100 billion last year, its valuation to $5.6 billion and it customer base to four million.

The Menlo Park-based startup remained tight-lipped about it business with Jump Trading. The company’s spokesperson, Nora Chan, declined to confirm if Jump executes the trades for Robinhood. Instead, she said that the company sends its orders to multiple trading venues including market makers, brokers and exchanges.

Robinhood acquired the coveted BitLicense from the New York Department of Financial Services and began offering trading of Bitcoin SV (BSV) and other cryptos this month. A previous report by Bloomberg also revealed that the startup is looking to raise at least $200 million from existing investors at an $8 billion valuation. The fundraising round would be a prelude to an even bigger fundraising round which will value the company at $13 billion.

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