In a significant development, Robinhood has concluded a successful buyback of $606 million worth of shares that were previously in the possession of FTX founder Sam Bankman-Fried. The completion of this transaction comes after receiving approval from the Securities and Exchange Commission (SEC) earlier this week.
These shares, initially valued at $450 million, had been under the custody of the U.S. Justice Department (DOJ) since January, following a series of legal actions against Bankman-Fried. In the months preceding the DOJ’s seizure of these assets, Bankman-Fried faced legal troubles when he was arrested and charged with more than a dozen crimes associated with the collapse of the cryptocurrency exchange FTX in November of the previous year. Notably, Bankman-Fried has pleaded not guilty to these charges and awaits a trial scheduled for October.
Robinhood, in a statement included in Thursday’s SEC filing, revealed that the funds for the repurchase were sourced from the company’s corporate cash reserves. The approval for this transaction was granted by District Judge Lewis Kaplan, who not only oversees Bankman-Fried’s ongoing criminal fraud case but also had the authority to reject Robinhood’s offer if it was perceived to benefit individuals linked to the alleged crimes of the disgraced crypto mogul.
Judge Kaplan stated, “The [U.S. Marshalls Service] or their designees are authorized to pursue a private sale of the Robinhood Shares,” emphasizing that this decision was made “in the best interests of the relevant stakeholders.”
In response to the successful buyback, Robinhood experienced a positive uptick in its share price, with a 3% increase on the day of the announcement. The company’s market capitalization now stands at over $10 billion. Robinhood’s Chief Financial Officer, Jason Warnick, expressed satisfaction with the completion of the transaction and emphasized the importance of acquiring Bankman-Fried’s 7.6% stake.
This buyback had been in the spotlight since February when Robinhood’s CEO, Vlad Tenev, revealed that the company’s board of directors had granted approval for the repurchase. At that time, the announcement had led to a 5% increase in Robinhood’s share price during after-hours trading, with Tenev explaining that the move aimed to eliminate a distraction for shareholders.
This successful buyback not only signifies a strategic financial move for Robinhood but also reflects the evolving dynamics within the cryptocurrency industry. As legal proceedings against Bankman-Fried continue, the fate of his assets and his ongoing legal battles will continue to capture the attention of investors and industry observers alike.
