June 1, 2023


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Robinhood Approves the Purchase of Sam Bankman-Fried’s $578 Million Stake

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The board of directors at Robinhood has given its approval for a plan to repurchase the $578 million stake in the company, which was acquired by former FTX CEO, Sam Bankman-Fried, and FTX co-founder, Gary Wang, last year.

The approval was confirmed in Robinhood’s fourth quarter report, released on February 8th.

According to Jason Warnick, Robinhood’s Chief Financial Officer, “Our Board has authorized us to pursue the acquisition of the majority or all of the shares held by Emergent Fidelity Technologies, which were purchased in May 2022.”

“The proposed share purchase underscores the confidence the Board of Directors and management team have in our business.”

The co-founders of FTX, Sam Bankman-Fried and Gary Wang, acquired 55 million shares of Robinhood stock, valued at $578 million based on current prices, in May of the previous year through Emergent Fidelity Technologies. The acquisition was funded by loans from Alameda Research, which is a sister firm of FTX.

However, on January 9th, the United States Department of Justice (DOJ) intervened and seized the 55 million shares, which represent approximately 7% of the company.

The assets were seized as a result of a court filing by cryptocurrency lending platform, BlockFi, seeking to reclaim the shares that had been used as collateral for a loan  taken out by Bankman-Fried and Wang.

According to a statement made by Jason Warnick, CFO of Robinhood, on February 8th to CNBC, the company has been working in collaboration with the DOJ to finalize a plan for the buyback of the shares. However, no definitive agreement has been reached yet.

The shares in question have been the center of multiple disputes. On December 23rd, FTX made a request to the court to prevent BlockFi  from claiming the Robinhood shares, following the  ccollapse of the exchange in November.

It is worth noting that although Emergent Fidelity Technologies did not file for Chapter 11 bankruptcy like FTX and other FTX-affiliated entities, firm did file for bankruptcy protection on February 3rd.

Q4 crypto revenue falls

The American trading platform experienced a decline in cryptocurrency transaction revenues from its “Robinhood Web3 Wallet” in the fourth quarter of 2022. The revenues saw a 24% decrease quarter-on-quarter, amounting to $39 million, and a 12% drop from the previous quarter.

Despite this, the company reported an overall net increase in revenue of 5% to $380 million in Q4 2022. However, it should be noted that the firm still reported a net loss of over $1 billion for the year.

Despite the fall in crypto-related revenue, the company managed to roll out its Robinhood Web3 Wallet to more than 1 million users who were previously on the waitlist.

In the aftermath of the release of its earnings report, Robinhood’s stock, traded under the symbol HOOD, has seen an increase of 4.78% as reported by Google Finance.

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