The shares, which Sam Bankman-Fried and Gary Wang, co-founders of FTX, purchased last year, have been a source of contention ever since FTX failed.
The former FTX CEO Sam Bankman-Fried and FTX co-founder Gary Wang purchased a $578 million stake in Robinhood last year. Robinhood’s board of directors has now approved a plan to buy back that stake.
The buyback of the stake was authorized by the board, Robinhood stated in its fourth-quarter report, which was released on February 8.
“Our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022,” said Robinhood’s chief financial officer Jason Warnick, adding:
“The proposed share purchase underscores the confidence the Board of Directors and management team have in our business.”
The FTX co-founders borrowed money from FTX’s sister company, Alameda Research, in order to purchase 55 million shares of Robinhood stock through Emergent Fidelity Technologies in May. These shares, valued at $578 million at current prices, were purchased.
On January 9, the 55 million shares, or around 7% of the corporation, were confiscated by the US Department of Justice (DOJ). Bankman-Fried and Wang used the shares as collateral to obtain a loan from bitcoin lending site BlockFi, which filed a lawsuit in court to repossess the shares.
Warnick stated to CNBC on February 8 that although nothing has been formalized yet, Robinhood has been collaborating with the DOJ on a plan to effectuate the buyback. The shares in question have been the subject of more than one dispute.
On Dec. 23, FTX asked the court to stop BlockFi from claiming the Robinhood shares, following the exchange’s collapse in November. Meanwhile, although Emergent Fidelity didn’t file for bankruptcy in November like FTX and other FTX-affiliated entities, the firm did file for bankruptcy protection on Feb. 3.