Robinhood Wants to Buy Out $575 Million in Sam Bankman-Fried Stock

Homecoming – Robinhood wants to buy the actions that Sam Bankman-Fried had acquired last year, via the company Emerging Technologies. The company may have the funds to complete this operation, but the procedure proves complicated.

Green light for Robinhood share buyback

According to report on Robinhood’s fourth quarter and full year 2022 results, the board of directors authorized the company to “pursue redemption of most or all” shares of the company thatEmerging Fidelity Technologies had purchased in May of last year. Emergent is a front company based in Antiga and Barbuda, which the founder of FTX controls 90%.

In May, Alameda Research had provided loans of more than $546 million, via four promissory notes, to Sam Bankman-Fried and fellow FTX co-founder Gary Wang. These funds were used to buy approximately 55 million shares of Robinhoodwhich represent a little more than 7% of participation in society. The value of these shares amounts to more than 575 million dollars at the current price.

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Robinhood case: the DoJ has its say

In a Dec. 22 filing, FTX asked for help from the U.S. judiciary to try to recover these shares owned by Emergent Fidelity Technologies. And FTX isn’t alone in wanting to get its hands on these stocks. BlockFi And Jonathan Ben Shimonwho are creditors of the crypto exchange, also covet them.

In view of the stakes, on January 9, the US Department of Justice (DoJ) decides to freeze these assets. In interview recently granted to CNBC, the CFO of Robinhood, Jason Warnickindicated that the company was ” in discussion ” with the DoJ for the repurchase of these shares.

What plan for the buyback of Robinhood shares?

Although the board of directors gave the go-ahead for this acquisition, Jason Warnick specified that he was “difficult to say exactly what the calendar will be”. Separately, Robinhood’s fourth quarter earnings report highlights that the company can not “predict when or if the share buyback will occur”.

In fact, at this stage, the company therefore has no formal plan relating to this operation. But Robinhood suggests it has the funds to make the buyout, saying in the report that the company’s balance sheet is strong and the company has more than $6 billion in cash.

These shares could thus return to Robinhood’s portfolio, if the DoJ gives its approval for this repurchase. Sam Bankman-Fried dare he start another legal proceeding to try to recover these assets?

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