This article briefly:
Robinhood has reached a $605.7 million agreement with the U.S. Marshals Service to repurchase 55.3 million shares.
The shares were initially lost during the high-profile bankruptcy and collapse of the FTX exchange last November.
The repurchase price is set at $10.96 per share. Robinhood's stock price rose 3% on the news.
On Friday, Robinhood reached a deal to buy back shares lost in the collapse of Sam Bankman-Fried’s cryptocurrency exchange FTX. The $605.7 million agreement with the U.S. Marshals Service enables Robinhood to recoup its investments in FTX and Bankman-Fried’s holding company, Emergent Fidelity Technologies.
The Marshals Service held 55.3 million Robinhood shares in escrow after FTX declared bankruptcy last November. On Friday, Robinhood announced it would buy back the shares at $10.96 per share. The U.S. District Court for the Southern District of New York approved the decision.
Robinhood buys back shares, shares rise immediately
The buyback covers all HOOD shares purchased by Emergent Fidelity Technologies in May 2022, representing more than 7% of Robinhood’s outstanding shares. Emergent Fidelity Technologies was co-founded by FTX founder Sam-Bankman Fried and executive Gary Wang. However, the company declared bankruptcy in February this year.
Robinhood shares rose more than 3% following the news. The stock buyback will allow the online brokerage to regain the equity it invested in FTX and Emergent.
Sam-Bankman Fried is currently awaiting trial at the Metropolitan Detention Center in Brooklyn
Just a few months before FTX’s collapse, Bankman-Fried revealed that he held a 7.6% stake in Robinhood through Emergent. At the time, he claimed that he had no intention of controlling Robinhood and talked about a potential partnership between the two companies.
But Bankman-Fried’s net worth quickly evaporated as FTX went bankrupt amid allegations of fraud. Bankman-Fried had previously tried to protect his Robinhood shares from FTX’s creditors.
The disgraced former billionaire, now in custody awaiting trial on criminal charges in October, will watch his former Robinhood shares flip back through a stock buyback deal. Prosecutors accused Bankman-Fried of witness tampering while out on bail, leading a judge to jail him before his trial could begin.
Robinhood may be aiming to distance itself from the disaster that was FTX with this stock buyback. Fortunately, the company has also avoided the solvency issues that plagued its now-ignominious competitor.
The $605 million share buyback provides Robinhood with an opportunity to recoup losses from the FTX implosion and turn the page on an unfortunate chapter for the company.
Robinhood was recently revealed to be the fifth largest holder of ETH
That same week, Arkham Intelligence revealed that Robinhood is the fifth-largest holder of Ether (ETH) in the world. Their wallets also hold a number of other cryptocurrencies such as SHIB ($163 million), LINK ($14.23 million), and AVAX ($10.4 million).
Just a day ago, Arkham announced that Robinhood was the third largest holder of Bitcoin (BTC). A screenshot of the wallet disclosed by Arkham showed 122,567 BTC, equivalent to about $3.43 billion. #Robinhood #USMS
