In a significant legal and financial development, Robinhood has concluded a successful buyback of seized shares worth $606 million, formerly owned by Sam Bankman-Fried, the founder of cryptocurrency exchange FTX. This transaction, approved by the U.S. Securities and Exchange Commission (SEC) and authorized by District Judge Lewis Kaplan, marks a pivotal moment in a complex legal saga that began with Bankman-Fried’s arrest and subsequent charges in connection with the FTX collapse in November.
Initially valued at $450 million when seized by the U.S. Justice Department (DOJ) in January, these shares became a focal point of controversy. Bankman-Fried, who has maintained his innocence and is awaiting trial scheduled for October, faced the prospect of losing a 7.6% stake in Robinhood.
The buyback, funded by Robinhood’s corporate cash reserves, pleased the company’s Chief Financial Officer, Jason Warnick, who noted its removal of a shareholder distraction. Robinhood’s stock price reacted positively, rising approximately 3% on the day, with the company’s market capitalization now exceeding $10 billion.
The acquisition of these shares is tied to a web of financial transactions, including loans from FTX’s sister company, Alameda, and legal disputes involving entities like BlockFi. Judge Kaplan’s order stipulates that net proceeds from the sale will be placed in the DOJ’s seized asset deposit fund.
Robinhood’s successful buyback of Bankman-Fried’s seized shares signals a step forward in resolving the legal entanglements surrounding the FTX collapse, but the crypto mogul’s trial in October will be the next significant milestone in this ongoing legal drama.