Robinhood: Payment for Order Flow, the GameStop Halt and the FTX Stake

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Vladimir Tenev and Baiju Bhatt, Stanford classmates who had built high-frequency trading platforms in New York, founded Robinhood in 2013 with $3 million in seed funding and launched zero-commission trading in 2015, when brokers charged $5 to $10 a trade. Early investors included Snoop Dogg, Jared Leto and Nas, and options and crypto followed in 2017 and 2018. Revenue came from payment for order flow, routing orders to market makers who profit from the spread. In December 2020 Robinhood agreed to a $65 million SEC settlement over disclosure and routing that cost customers an estimated $34.1 million in price improvement.

Trading volume jumped 139% in the second quarter of 2020, and outages led to a $57 million FINRA fine and a $9.9 million class settlement. On January 28, 2021, Robinhood restricted GameStop buying after the NSCC raised its collateral requirement from $700 million to $3.7 billion, forcing it to raise $3.4 billion in emergency capital; later antitrust suits were dismissed. It went public in July 2021 at a $32 billion valuation, suffered a voice phishing breach exposing over five million emails, cut staff by 9%, 23% and 7%, and paid $605 million to buy back the 7.6% stake Alameda Research had bought with misappropriated FTX customer funds. In 2025 revenue reached $4.47 billion with net income near $1.9 billion.

• Massachusetts regulators sued over gamification such as confetti after trades, and Robinhood settled the remaining claims in 2024 for $7.5 million.
• In June 2020 a University of Nebraska student died by suicide after the app showed a negative balance over $730,000 from a multi-leg options trade.
• Alexandria Ocasio-Cortez and Ted Cruz both called for an investigation after the GameStop restrictions.
• Robinhood bought Bitstamp for $200 million, launched a Gold card with 3% cash back and a desktop platform called Legend, and offered tokenized stocks in the EU.
• FINRA fined Robinhood $26 million in early 2025 over anti-money laundering and supervision failures.