Robinhood to buy Ziglu crypto platform at a 57% discount

What’s new? Online broker Robinhood cut its offer to buy cryptocurrency platform Ziglu by 57% due to unfavorable market conditions. An initial offer of $170 million was made in April, but the company revised it in August, lowering the price to $72,5 million. Ziglu CEO Mark Hipperson said that the board and a majority of voting shareholders approve the new deal, AltFi writes, citing investor documents.

The AltFi material

What else does the publication report? Robinhood representatives highlighted multiple factors for the downside of the deal, including a bear market, the collapse of major cryptocurrency platforms such as BlockFi, Celsius, and Voyager, as well as other macroeconomic factors. Ziglu is among the top 50 unsecured lenders to Celsius.

In a letter to investors, Hipperson said that if the deal falls through, the startup will be left in an “extremely challenging market, and undercapitalized for the period ahead.” While the deal means a lower price for the company and less cash for shareholders, Hipperson also noted that it would eliminate a number of liabilities, including a $10 million reimbursement reserve fund. It was to be deducted from the purchase price and held for 18 months in case of warranty claims.

Under Robinhood's new proposal, the company will assume responsibility after the deal closes, except for a $500 000 fund related to price changes and other expenses.

Hipperson said the revised proposal is “the best and only reasonable path forward for Ziglu.”

The British platform Ziglu was founded in 2018. Its customers can trade in 11 cryptocurrencies, pay for purchases by card and make overseas transfers. The platform has been approved by the UK Financial Conduct Authority (FCA) as a legal cryptocurrency provider.

Earlier, the NYDFS fined Robinhood's crypto unit $30 million for violating AML and cybersecurity regulations. At the end of June, representatives from FTX, a cryptocurrency exchange, denied any information about the possible purchase of Robinhood. In May, FTX CEO Sam Bankman-Fried bought a 7,6% share of Robinhood worth $648,29 million. After that, the share price of the online broker rose by more than 30%.