Chinese-Owned Stock Trading App Is Quietly Amassing US Users

December 13, 2020 Updated: December 21, 2020

News Analysis

The U.S. stock market gyrations of 2020 need no introduction.

From the market depths in March, the federal stimulus-funded market rebound, to the meteoric rise of Tesla and recent technology IPOs, the year of COVID-19 has seen a large influx of consumers taking up stock investing. And for these new investors, the platform of choice to trade stocks is Robinhood.

While Robinhood initially popularized the commission-free stock trading model and has amassed more than 13 million users, Webull, a little-known competing app, has steadily been taking market share from Robinhood.

And an even lesser-known fact is that the company behind the app, Webull Financial LLC, is Chinese-owned. 

Webull’s slick website doesn’t provide any information about its Chinese origins. In most respects, it seems like any other fintech company. Webull states that it operates at the intersection of finance and technology, with an American CEO, Anthony Denier, at the helm since 2017. It partners with Apex Clearing Corp.—which also services SoFi and Robinhood—to clear trades.

Like any other broker, Webull has the customary disclosures about the risks of investing and is a member of the U.S. Securities Investor Protection Corp. (SIPC) and Financial Industry Regulatory Authority (FINRA). Webull’s registration information on the FINRA website states that it’s headquartered at 44 Wall St. in New York City.

On Nov. 19, Webull announced that it would support cryptocurrency trading through its subsidiary, Webull Crypto LLC, and on Dec. 9 said that it officially launched its stock trading platform in Hong Kong, through a locally registered broker-dealer named Webull Securities Ltd. 

Webull is operated by Fumi Technology, a fintech company based in Hunan Province, China. Fumi, which has a number of established partners including Danish investment bank Saxo Group, itself aims to democratize the distribution of market information and become a Bloomberg-like solution for the masses. 

Based in Changsha City in Hunan Province, Fumi’s founding team previously worked at Chinese tech giants Alibaba, Xiaomi, and Huawei, as well as Bloomberg in China. Wang Anquan, Fumi’s lead founder, previously worked at Alibaba and Xiaomi, a major smartphone manufacturer.

In terms of financial backing, Fumi has raised approximately 600 million ($92 million) in funding from a variety of investors through Series B. Seed funding was provided by Xiaomi, with Series A and Series B equity provided by various China-based venture capital funds.

In other words, Webull is as Chinese as it gets.

Stock Trading, With Chinese Characteristics? 

It’s not surprising that Webull is downplaying its Chinese ownership. 

The Trump administration has sought to regulate Chinese companies’ ability to operate in the United States. The State Department considered placing restrictions on Chinese payments apps such as Ant Group’s Alipay and WeChat’s payment platform. The House of Representatives recently passed a measure to ban all U.S.-listed Chinese stocks that don’t adhere to U.S. audit and inspection standards.

In theory, Webull should be attracting immense scrutiny. But curiously, it has escaped attention, except for a Dec. 8 expose in Bloomberg Businessweek, which stated that Webull has attracted thousands of former Robinhood traders.

Webull apparently voluntarily sought a review of its ownership by the Committee on Foreign Investment in the U.S. (CFIUS), which has previously blocked other Chinese investments in the United States. But CFIUS ultimately decided not to review the company, according to the Bloomberg report.

Webull Financial is a “U.S. broker-dealer and we’re regulated by the SEC and FINRA, and we’re a completely separate entity than our parent company,” Denier said on Bloomberg TV on Dec. 9, when asked about U.S.–China tensions and their risks to Webull’s business. “Our parent company is a technology company that builds the technology and enhances the app. Here in the U.S., we’re simply a broker-dealer taking on U.S. customers.”

While all of that may be true, in this political environment, it should concern security experts and the U.S. government that a Chinese-owned company has direct access to U.S. user data. The company says that it stores user data within the United States, but a financial firm is a completely different ballgame than, for instance, a social media platform like TikTok.

As a broker-dealer, Webull collects confidential personal information such as Social Security numbers, home addresses, and bank account numbers from its customers. 

Any Chinese company, private or state-owned, must ultimately answer to the Chinese Communist Party (CCP) if called upon. The CCP unilaterally determines all Chinese laws. No matter how water-tight, company privacy policy can’t supersede CCP demands.

Webull today has more than 2 million users, according to the Bloomberg report, although it’s unclear if that number includes users outside of the United States. The popularity of stock trading—especially during the pandemic—could quickly scale Webull’s user base. 

A previous version of this article misstated the region of China where Fumi Technology is based. The Epoch Times regrets the error.