Robinhood board approves plan to buy back Sam Bankman-Fried’s $578 million stake
Robinhood’s board of directors has approved a plan to purchase the $578 million worth of shares owned by former FTX CEO Sam Bankman-Fried and FTX co-founder Gary Wang. The board confirmed the approval of Robinhood’s fourth-quarter report, published on February 8th.
The shares were bought by Bankman-Fried and Wang in May 2022 through Emergent Fidelity Technologies by taking out loans from FTX’s sister firm Alameda Research. However, on January 9th, the United States Department of Justice (DOJ) seized 55 million shares, equivalent to 7% of the company.
The assets were seized following a court filing from cryptocurrency lending platform BlockFi, which claimed the shares as Bankman-Fried, and Wang used them as collateral for a loan from the platform. Robinhood’s CFO, Jason Warnick, has confirmed that the company has been working with the DOJ on a plan to facilitate the buyback, but more is needed.
The shares have been at the center of multiple disputes, with FTX asking the court to stop BlockFi from claiming the shares in December following the exchange’s collapse in November. Emergent Fidelity filed for bankruptcy protection on February 3rd.
Warnick stated that the proposed share purchase “underscores the board of Directors and management team’s confidence in our business.” Despite the 24% quarter-on-quarter fall in cryptocurrency-based transaction revenues from its “Robinhood Web3 Wallet” to $39 million in the fourth quarter, Robinhood’s overall net revenues increased by 5% to $380 million. However, the company reported an overall net loss of over $1 billion in 2022.
Robinhood’s stock has increased by 4.78% since the earnings report was released.