Robinhood to Purchase SBF’s 50M HOOD Shares

American trading platform Robinhood has finally received board of directors approval to buy back the $578 million in stake in their company that was previously acquired by former FTX CEO Sam Bankman-Fried and FTX co-founder Gary Wang.

In its fourth-quarter report published on February 8, Robinhood confirmed that the board has approved its plan to buy back the stake. The chief financial officer (CFO) of the company Jason Warnick stated:

“Our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022. The proposed share purchase underscores the confidence the Board of Directors and management team have in our business.”

In May last year, by taking out loans directly from FTX’s sister company, Alameda Research, the FTX co-founders purchased 55 million shares of Robinhood stock through Emergent Fidelity Technologies, which are currently worth $578 million at current prices.  

Bankman-Fried and Wang used the shares as collateral to obtain a loan from crypto lending platform BlockFi, which filed a lawsuit in court to reclaim the shares. On January 9, the 55 million shares, or around 7% of the company, were seized by the United States Department of Justice (DOJ).

Warnick stated to CNBC on February 8 that although nothing has been formalized yet, Robinhood has been cooperating with the DOJ on a plan to facilitate the planned buyback.

Robinhood Revenue drop in 2022

The cryptocurrency-based transaction revenues from the trading platform’s “Robinhood Web3 Wallet” dropped 24% to $39 million in the fourth quarter from the third quarter. Comparing the third quarter to the second, revenue decreased by 12%.

In the fourth quarter of 2022, total net revenues rose 5% to $380 million. But in 2022, the company confirmed an overall net loss of more than $1 billion.

Despite the company’s success in delivering the Robinhood Web3 Wallet to more than 1 million waitlisted consumers over the course of the quarter, cryptocurrency-related income has fallen down due to prolonged crypto winter.