Robinhood raised $1 billion from existing investors just hours after it halted purchases of GameStop, suggesting the free-trading app faced a potential cash shortage. The startup faced a bipartisan backlash Thursday for its decision to limit trading — a move that ran counter to its stated mission of democratizing investing. “This is a strong sign of confidence from investors that will help us continue to serve our customers,” Robinhood said in a statement. But the fact that Robinhood felt the need to raise so much money, just months after raising hundreds of millions of dollars, signals the financial pressure facing the company. It either faced a liquidity crisis — or narrowly avoided one. Robinhood told CNBC on Thursday that tapping its credit line was a “proactive measure.” GameStop\n \n (GME), AMC\n \n (AMC) and other stocks have been skyrocketed in recent days, bid up by an army of traders on a Reddit message board called WallStreetBets. It’s not clear how much Robinhood was valued at in the last-minute round of funding. The startup, which had been eyeing a potential 2021 IPO, was valued at $11.2 billion in August. Robinhood originally cited “recent market volatility” for its decision to restrict trading in GameStop, AMC, Nokia\n \n (NOK) and other Reddit darlings. ‘We had to restrict buying’ Facing a backlash from investors and lawmakers, Robinhood later explained that the market turbulence created financial pressures. That’s because whenever investors buy stocks, brokerages like Robinhood must make a deposit first at a clearing house. To protect investors, regulators require brokerages to keep a certain amount of capital on hand. These cash requirements can go up, sometimes dramatically, during times of market stress and heavy trading. “To prudently manage the risk and the deposit requirements, we had to restrict buying in these 13 stocks,” Vlad Tenev, Robinhood’s co-CEO, told CNN’s Chris Cuomo Thursday evening. “We’re in a historic situation where there’s a lot of activity and a lot of buying concentrated in a relatively small number of symbols that are going viral on social media. We haven’t really seen anything like this before.” Robinhood denies hedge fund speculation Part of the outrage at Robinhood is driven by a sense that the company limited trading in an effort to help big players on Wall Street. “So much for being on the side of the little guys,” one user on Reddit wrote. “Just another shill brokerage paid off by the big players.” Robinhood denied speculation that the startup decided to halt buying in GameStop or was pressured to by hedge funds or other Wall Street players. “I want to be 100% clear. This decision was not made on the direction of any market maker or other market participants,” Tenev told CNN. Much of that speculation surrounded entities owned by billionaire Ken Griffin. Earlier this week, Citadel, the massive hedge fund owned by Griffin, provided a $2 billion bailout to GameStop shortseller Melvin Capital Management. Melvin Capital had bet that GameStop shares would drop — and the hedge fund was crushed when the opposite happened. Citadel Securities, the market maker owned by Griffin, is a major source of revenue for Robinhood. Like other brokerages, Robinhood gets paid to route orders to market makers, a controversial practice known as payment for orderflow. Representatives for the Griffin-run entities denied any role in the Robinhood decision to halt purchases of GameStop. “Citadel is not involved in, or responsible for, any retail brokers’ decision to stop trading in any way,” the hedge fund said in a statement Thursday. Citadel Securities, the market maker, said it has not “instructed or otherwise caused any brokerage firm to stop, suspend or limit trading or otherwise refuse to do business.” Still, the entire episode raises questions about Robinhood’s business model — and whether it has enough capital to avoid having to shut down trading in volatile stocks again. And the biggest question is whether Robinhood’s rapidly growing user base sticks with the startup or goes to one of its rivals that adopted its free-trading business model.