Robinhood has successfully regained $605.7 million worth of contested shares initially associated with FTX’s founder, Sam Bankman-Fried, from the U.S. Marshal Service. The acquisition, valued at $10.96 per share for a total of 55.3 million shares, has resolved ongoing legal issues and positively influenced the company’s stock, which has risen by 2.6% to trade at $11.8 at the time of reporting.
The shares were originally part of a 7% stake in Robinhood held by Emergent Fidelity Technologies Ltd., a now-bankrupt firm formerly run by Bankman-Fried. Robinhood’s board had previously approved a plan to buy back a majority of these shares.
The ownership of these shares had become a complex legal matter involving various major players, such as FTX and the insolvent crypto lender, BlockFi Inc. BlockFi had argued that these shares were used as loan collateral by Emergent Fidelity. The Department of Justice had advised all parties to avoid pursuing this matter in bankruptcy courts.
Financial analysts, led by Devin Ryan of JMP, have noted that the repurchase removes a layer of uncertainty that had been affecting Robinhood’s stock value in the short term.
Ongoing Legal Issues for Bankman-Fried
Meanwhile, Sam Bankman-Fried remains under house arrest pending his trial in Brooklyn, scheduled for October 2nd. He has denied all allegations of fraud related to FTX and Alameda Research. His bail was revoked earlier this month, making investors particularly wary of any entities or financial products connected to him.
This share buyback marks a crucial step in Robinhood’s ongoing effort to rebuild investor confidence. As the company navigates through a maze of legal and regulatory challenges, this move highlights its commitment to stabilizing its financial position and distancing itself from contentious figures like FTX’s Bankman-Fried.