FairX Shuts Down as Robinhood Raises $323 Million For Expansion

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FairX, a crypto bank that hoped to operate using a “dematerialized bank deposit”, has been forced to close its doors after a lack of VC investment meant that it couldn’t afford to continue. On the flip side, Robinhood, the wildly successful trading and investment app, took in $323 million in their latest fundraising round to aid in their expansion plans.

The contrasting fortunes illustrate the agonies and ecstasies of being involved in startups. This is especially true with something so nascent as cryptocurrencies, where simply getting investors to understand the concept can be half the battle.

Lack of Seed Investors Kills FairX

FairX announced in an exhaustive 30-long Twitter thread that it was closing its doors, stating the various problems the platform had encountered in its short life and that it had no choice but to “start winding things down”. The thread pulled no punches, stating out of the gate that “our original goals of creating a licensed national bank is unfortunately failing”, despite getting regulatory clearance from a number of bodies, and also took a swipe at stablecoins, saying, ironically, that they were “doomed to failure”.

The issues apparently revolved around the technicalities of funding a new bank, with seed investors not able to receive preferential treatment, which had the obvious effect:

Concerns were also raised about the presence of a non-banker in the team, with the project receiving feedback that it “might be too early for this kind of deep infrastructure work in this space”. Staring bankruptcy in the face, the team had no choice but to pull the plug, bringing to an end their ambitions for Frank Financial, the would-be dematerialized crypto bank.

Robinhood Seeks Expansion After Fundraise

Robinhood, the commission-free trading and investment app, had altogether better news yesterday when it announced a $323 million fundraise to take the value of the company to $7.6 billion. A short blog post announced that the raise was “led by DST Global, with participation from investors including Ribbit Capital, NEA, Sequoia, and Thrive Capital.”

The platform, which at the start of the year was known to be eyeing the UK crypto market, allows anyone to invest in stocks, ETFs, options, and cryptocurrencies, stated that the extra money would be used to “keep pursuing our mission of democratizing finance for all”. Robinhood took the crypto world by storm when it announced the addition of cryptocurrency trading in January 2018, with over 1.25 million people on the waiting list within 24 hours.