Robinhood Buys Back Sam Bankman-Fried’s $606 Million Shareholding

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  • Robinhood has successfully completed a $606 million share buyback from FTX founder Sam Bankman-Fried
  • Initially valued at $450 million, the shares were seized by the U.S. Justice Department in January amid charges against Bankman-Fried related to the FTX crypto exchange’s collapse
  • This move has removed a distraction for Robinhood shareholders and led to a 3% increase in the company’s share price, with a market capitalization now exceeding $10 billion

Robinhood has successfully completed a $606 million buyback of seized shares once held by FTX founder Sam Bankman-Fried. The action followed a court’s approval last week and led to a 4% jump in Robinhood’s share price. Initially valued at $450 million, the shares came into the possession of the US Justice Department (DOJ) in January a month after Bankman-Fried had been arrested. The shares belonged to Emergent Fidelity Technologies, Bankman-Fried’s personal investment vehicle, and were also being sought by bankrupt lending platform BlockFi.

Alameda Lent Bankman-Fried $546 Million for Shares

Bankman-Fried acquired the Robinhood shares through Emergent Fidelity Technologies months before the crypto exchange’s downfall, securing a $546 million loan from FTX’s sister company, Alameda Research, to finance the purchase. Shortly after FTX’s collapse, the now-defunct BlockFi filed a lawsuit against Bankman-Fried, claiming that the Robinhood shares had been pledged to them under a November agreement. The court last week ordered that BlockFi be listed as an entity to be notified if the Robinhood purchase fell through.

In January, Bankman-Fried’s legal team requested that he retain the shares, citing their necessity to fund his criminal defense, but Judge Kaplan’s order approving the sale specified that net proceeds would be held in the DOJ’s seized asset deposit fund.

DOJ Could Have Rejected Deal

Robinhood used corporate cash from its balance sheet to repurchase the shares, as stated in the Thursday filing. District Judge Lewis Kaplan, overseeing Bankman-Fried’s criminal fraud case, had ruled that the DOJ could reject Robinhood’s offer if it benefited individuals associated with the alleged crimes of the disgraced crypto mogul, saying that “The [US Marshalls Service] or their designees are authorized to pursue a private sale of the Robinhood Shares,” adding that this move was “in the best interests of the relevant stakeholders.”

Robinhood’s share price increased by approximately 3% on that day, with a market capitalization exceeding $10 billion.