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Robinhood Board Authorizes Purchase of Shares Bought by FTX’s Sam Bankman-Fried, Gary Wang
The online brokerage firm is planning to buy most or all of the 55 million shares previously owned by holding company Emergent Fidelity Technologies.
By Nelson Wang
Updated May 9, 2023, 4:07 a.m. Published Feb 8, 2023, 9:22 p.m.
Robinhood Market’s (HOOD) board of directors authorized the company to pursue purchasing most or all of the 55 million shares that Emergent Fidelity Technologies bought in May 2022, Robinhood said in its fourth-quarter earnings report.
Emergent Fidelity Technologies is the holding company controlled by former FTX executives Sam Bankman-Fried and Gary Wang. Last month, the U.S. Department of Justice seized those shares of Robinhood stock, worth nearly $500 million at the time.
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"The proposed share purchase underscores the confidence the Board of Directors and management team have in our business," the company wrote in its press release.
On the earnings call with analysts, Robinhood CEO Vlad Tenev said “we think this repurchase will be accretive over time and remove a distraction for shareholders.” He noted that the company's balance sheet is strong with over $6 billion in cash.
Tenev added that because it was an unusual situation, he couldn’t predict how long the purchase of its shares will take, but that it would keep investors updated on its progress.
It wasn’t immediately clear who Robinhood would be buying the shares from.
The ownership of the stock is in dispute as the fraud case against Bankman-Fried continues to unfold.
Emergent Fidelity, which was co-founded by FTX founders Bankman-Fried and Wang, bought the shares but promised them as collateral for a loan from crypto lender BlockFi. The lender, which filed for bankruptcy protection last year, has filed to lay claim to the value of the shares.
FTX has likewise claimed the shares as part of its own bankruptcy process, as has Bankman-Fried in his own ongoing legal issues.
While Emergent Fidelity did not file for bankruptcy alongside the other FTX entities in November, the holding company did file for bankruptcy protection this year.
UPDATE (Feb. 8, 2023 21:53 UTC): Added quote from company and additional background.
UPDATE (Feb. 8, 2023 23:41 UTC): Added quotes from the earnings call.
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