Robinhood has successfully completed a $606 million buyback of shares that were seized from FTX founder Sam Bankman-Fried, as reported in an SEC filing following a recent court approval.
Robinhood's Share Price Rises After Buying Back Seized Shares From Sam Bankman-Friede
Robinhood has successfully completed a $606 million buyback of shares that were seized from FTX founder Sam Bankman-Fried, as reported in an SEC filing following a recent court approval.
The U.S. Justice Department (DOJ) seized these shares in January, with an initial value of $450 million. This action came after Bankman-Fried was detained and charged in connection with the failure of the FTX cryptocurrency exchange in November. The FTX founder has entered a not guilty plea and is presently awaiting his October trial.
According to the filing on Thursday, Robinhood repurchased the shares using corporate cash from its balance sheet. The criminal fraud case against Bankman-Fried was heard by District Judge Lewis Kaplan, who ruled that the DOJ had the option of rejecting Robinhood's offer if it was shown to benefit anybody connected to the disgraced crypto founder.
Judge Kaplan authorized the U.S. Marshals Service or their designees to pursue a private sale of the Robinhood shares, deeming it in the best interests of relevant stakeholders.
Robinhood's share price saw a 3% increase on the day following the buyback, and its market capitalization surpassed $10 billion. Jason Warnick, Robinhood's Chief Financial Officer, expressed satisfaction with the completion of the purchase of Bankman-Fried's 7.6% stake.
Bankman-Fried and FTX co-founder Gary Wang had acquired the Robinhood shares through a holding company called Emergent Fidelity Technologies months before FTX's collapse. They secured a $546 million loan from FTX's sister company, Alameda, to fund the purchase, as revealed in a court filing from December.
The DOJ had argued that the proposed expert witnesses for Bankman-Fried's forthcoming October trial should not be allowed to testify because of errors in their disclosures and assessments.
Additionally, BlockFi, a defunct cryptocurrency lender, sued Bankman-Fried on the grounds that the Robinhood shares were committed to it in accordance with a November agreement. According to Judge Kaplan's order, BlockFi had to be informed if the arrangement with Robinhood did not go as expected. In accordance with Kaplan's decision, the DOJ's seized asset deposit fund will be where the net profits of the sale will be kept.
