Robinhood Acquires Pluto Capital for AI-Powered Investing

Robinhood Markets, a popular American financial services company, announced it has acquired Pluto Capital, an AI-powered investment research platform. With the latest acquisition, Robinhood seeks to corporate the use of advanced AI into its trading services, and thus enhance user experience.

It looks like Robinhood is actively upgrading its services and offerings despite the ongoing regulatory battle with the SEC.

According to Robinhood’s blog announcement, the acquisition will help Robinhood realize its goal of intelligent investing with data-driven insights and personalized strategies. The firm expects to benefit from Pluto’s unique advantages to make AI-powered investment tools accessible to everyone.

Apparently Not Worried About The SEC

With Pluto, users can access enhanced data analysis powered by advanced AI. Pluto’s AI is able to process vast amounts of financial data for quicker trend identification, said Robinhood.

In addition, Pluto tailors investment recommendations to individual risk tolerance, goals, and behavior. Investors can also receive real-time updates and AI-driven portfolio optimization for better returns.

Mayank Agarwal, VP of Engineering at Robinhood Markets, said Pluto has “built an impressive platform that is highly regarded in the financial services industry.” Agarwal added that Pluto’s AI expertise and its mission to democratize finance are in line with Robinhood’s goal to bring AI-based tools to its customers.

Jacob Sansbury, CEO of Pluto, believes Robinhood is a good fit for Pluto and its mission.

“Robinhood is the ideal destination to build products that democratize access to financial services like wealth management and financial planning through state of the art AI. I look forward to innovating at the company which has inspired me and so many others,” said Sansbury.

As part of the acquisition, Sansbury will join Robinhood to integrate AI capabilities across the platform.

Founded in 2021 by Sansbury, Pluto is an AI-driven investment advice platform that offers a marketplace of digital investment strategies for cryptocurrency trading. The company was created with Gen Z users in mind to facilitate quantitative retail investing. Sansbury is a former technical lead and senior software engineer at NVIDIA.

The latest acquisition came after Robinhood announced it reached a deal to acquire cryptocurrency exchange Bitstamp last month. The deal is valued at $200 million.

Fonded in 2011, Bitstamp is a prominent cryptocurrency trading platform in the UK, Bitstamp has a customer base of 4-5 million and offers a wider range of digital tokens, as well as lending and staking services, compared to Robinhood’s current crypto offerings.

Expected to be completed in the first half of 2025, the deal will allow Robinhood to expand its global footprint in the cryptocurrency market and compete with larger crypto trading platforms like Binance and Coinbase.

The acquisition will also help Robinhood develop an institutional business to complement its consumer-focused products, the firm said.

Growth Amid Hurdles

Robinhood’s crypto business has seen significant growth, contributing to the company’s strong financial performance in Q1 2024. However, Robinhood’s crypto expansion faces regulatory scrutiny from the SEC, which has signaled potential enforcement action against the company’s token offerings.

In May 2024, the SEC sent Robinhood a Wells Notice, a common act that precedes its intent to pursue enforcement action against Robinhood Crypto for alleged violations of securities laws The securities regulator alleges that certain crypto tokens offered on Robinhood’s platform should be classified and registered as securities, which Robinhood failed to do.

Potential consequences for Robinhood include civil injunctions, administrative actions, cease-and-desist orders, disgorgement, and monetary penalties.

In response to the potential legal action, Robinhood has signaled its intent to vigorously contest the SEC’s allegations. The firm argues that the crypto assets on its platform are not securities.

Despite the ongoing regulatory battle with the SEC, Robinhood is focusing on its business growth and improvement with the recent acquisitions.

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