Robinhood’s board has approved a plan to purchase Sam Bankman-Fried’s shares in the company, which amount to more than a 7% stake. Robinhood said it’s working with the Department of Justice on the plan and can’t guarantee when or if it will happen. The 55 million shares are at the heart of a dispute between Bankman-Fried and a set of international and domestic entities, including crypto lender BlockFi.
Robinhood CEO Vlad Tenev said “we think this repurchase will be accretive over time and remove a distraction for shareholders.” He said that the company’s balance sheet is strong with over $6 billion in cash.
“The proposed share purchase underscores the confidence the Board of Directors and management team have in our business,” Robinhood noted. Robinhood Chief Financial Officer Jason Warnick stated “The board has authorized us to go and repurchase those and so we’re in discussions with the DOJ on that. Hard to tell exactly what the timeline is going to be.”
However, Robinhood promised to provide “updates as appropriate” regarding the share purchase in its earnings report. A January 20th filing by the DOJ, which seized SBF’s Robinhood stake, revealed that the former FTX chief executive held 55,273,469 HOOD shares. SBF originally purchased the sizable stake, which translated to 7.6% of Robinhood’s capitalization, last May. The share purchase was facilitated through Emergent Fidelity Technologies, with the initial value at $649 million. However, as of Wednesday’s close, the stake value is just over $578 million.
SBF controlled Emergent Fidelity as sole director and majority owner alongside fellow FTX co-founder Gary Wang. According to court filings, Bankman-Fried and Wang extracted loans directly from Alameda Research to fund the share purchase. These shares are also at the heart of a legal tussle between FTX, SBF, BlockFi, and numerous other international entities.
According to a Jan. 20 filing by the DOJ, Bankman-Fried held 55,273,469 Robinhood shares, over 7% of the company’s outstanding shares. As of Wednesday’s close, that stake is valued at over $578 million. Robinhood CEO Vlad Tenev said “we think this repurchase will be accretive over time and remove a distraction for shareholders.” He said that the company’s balance sheet is strong with over $6 billion in cash.
Emergent Fidelity was controlled by both Bankman-Fried and fellow FTX co-founder Gary Wang. Both Wang and Bankman-Fried took out loans directly from Alameda Research to fund the acquisition, according to court filings. The shares are also at the heart of a contentious court battle between FTX, Bankman-Fried, crypto lender BlockFi and a set of international entities.
