- Robinhood is trying to buy back shares purchased by former FTX CEO Sam Bankman-Fried
- Bankman-Fried’s 7.6% stake in Robinhood remains contested in his criminal case and FTX’s bankruptcy
- Robinhood’s CEO Vlad Tenev said the purchase of 55 million shares has already been approved by the board of directors but did not give a timeline for completion
Robinhood wants its all back
Robinhood Markets has announced plans to buy back shares that were purchased by former FTX CEO, Sam Bankman-Fried. The 7.6% stake in Robinhood has become a contested factor in both Bankman-Fried’s criminal case and FTX’s bankruptcy. This purchase aims to remove a distraction for shareholders and has already been approved by Robinhood’s board of directors, according to the CEO Vlad Tenev. However, a timeline for the completion of the purchase has not been given.
Shares of Robinhood increased by over 5% to around $11 in after-hours trading after the announcement. Robinhood is currently working with the Department of Justice on this matter. Bankman-Fried and FTX co-founder Gary Wang purchased the shares in Robinhood last May through a holding company called Emergent Fidelity Technologies.
Taken into custody
The U.S. Justice Department disclosed last month that it had taken custody of the shares, which were worth around $450 million at the time they were secured. Defunct crypto lender, BlockFi, is also trying to secure the Robinhood shares, claiming that they were pledged to it under the terms of an agreement made last November. Bankman-Fried’s lawyers have filed a motion to keep possession of the equities to pay for his criminal defense.
Robinhood has been a popular crypto and stock trading app. The company has recently reported a decline in revenue from cryptocurrencies on its trading platform, which fell 24% to $39 million in its final fiscal quarter of last year. However, Robinhood remains optimistic about the crypto space, with its CFO Jason Warnick stating, “We continue to think that crypto is here to stay. We’re continuing to invest in this space and are really optimistic.” The company recently released its digital wallet built around self-custody, which is being rolled out to more than a million users.
Controversy was the reason
The total amount of assets under custody on Robinhood’s platform declined for the fourth consecutive quarter to $62 billion from $98 billion a year ago. The amount of cryptocurrencies on its platform sank 62%, down to $8 billion compared to $22 billion. Despite this, Robinhood is encouraged by the activity it has seen since the start of this year as crypto prices have shown signs of a rebound.
FTX has also recently faced its own controversies. The FTX Contagion has affected many companies in the crypto industry, leading to a wave of regulations and investigations. The FTX founder, Sam Bankman-Fried, has been in the center of these controversies, which have led to the seizure of millions in Robinhood shares from FTX by the U.S. Justice Department. Currently Sam Bankman-Fried is fighting for his freedom as the trial is underway albeit with some possible delay