Robinhood Board Greenlights Buy Back Of Sam Bankman-Fried's 55M Shares

The board of directors of the American retail broker Robinhood has already authorized the company to buy back most or all of the hotly-contested 55 million shares of controversial crypto personality Sam Bankman-Fried of the now-bankrupt crypto empire FTX.

"Robinhood Board of Directors authorizes, subject to final approval, Robinhood to pursue purchasing most or all of the 55 million remaining Robinhood shares that Emergent Fidelity Technologies Ltd. bought in May 2022," the fourth quarter earnings report read.

Bankman-Fried, the founder and former CEO of FTX, originally purchased his stake in May 2022 through Emergent Fidelity Technologies, a holding company that he also owns.

Unlike other businesses founded by Bankman-Fried, Emergent Fidelity Technologies did not file for bankruptcy in November. It, however, filed for Chapter 11 bankruptcy protection on Feb. 3.

Robinhood plans to buy back the stake at market price from the U.S. Department of Justice (DOJ), which seized the asset in January as possible proceeds of suspected criminal activity.

For the retail brokerage, its buyback plan is an indication of its confidence in the future and noted that "the proposed share purchase underscores the confidence of the Board of Directors and management team."

For Robinhood's chief executive Vlad Tenev, buying back the shares "will be accretive over time and removes a distraction for shareholders."

As for when the buyback would take place is still uncertain and relative to the outcome of several court actions. Any deal for the hotly-contested Robinhood shares requires a sign-off from the board of directors of Robinhood and an assurance that the shares are free of claims.

"Since there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place. We will provide updates as appropriate," Robinhood said in its fourth-quarter earnings report.

It is not clear where Robinhood would buy back the shares from since until now the stock is in dispute because the fraud case of Bankman-Fried continues to unfold.

Based on the Jan. 20 filing by the Department Of Justice, Bankman-Fried held 55,273,469 Robinhood shares, which make up over 7% of the company's outstanding shares.

The stake was valued at more than $578 million as of Wednesday's close.