Robinhood Set to Buy FTX Founder’s Stake in the Company

• Robinhood Markets aims to purchase its shares that it sold to the founder of bankrupt crypto exchange FTX, Sam Bankman-Fried.
• The board of the American financial services company has also given its approval for the purchase of the shares.
• Over 50 million HOOD shares were first purchased by Sam Bankman-Fried and co-founder of FTX, Gary Wang, in early 2022.
• The company witnessed a 5% increase in its net total revenue, which came in at around $380 million.

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Robinhood Markets, one of the most prominent crypto and stock trading companies based in Menlo Park, California, aims to purchase its shares that it sold to the founder and former CEO of bankrupt crypto exchange FTX, Sam Bankman-Fried, also known as SBF in the crypto space. These HOOD shares have been a crucial matter over which many entities have been fighting. Interestingly, the board of the American financial services company has also given its approval for the purchase of the shares. 

Over 50 million Robinhood shares were first purchased by Sam Bankman-Fried and co-founder of FTX, Gary Wang, in early 2022 when rumors were circulated in the market that SBF’s exchange will take over the American financial services provider. However, this did not happen, as both companies denied the rumors not much later. Interestingly, the Department of Justice (DoJ) currently has control over the HOOD shares, which are currently worth close to $590 million at the time of writing.

In its fourth quarter report, Robinhood confirmed that it had received the approval of the board to purchase the stake that the 

“Looking back over the past year, I’m incredibly proud of the tremendous execution of our team on our 2022 product roadmap. We’re now starting to see meaningful traction on a number of the products we launched, which gives us confidence they can grow into significant business lines over time,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. 

Moreover, Tenev, along with his co-founder Baiju Bhatt, also confirmed the cancellation of nearly $500 million in share-based compensation to ensure the company “has as many resources as possible to deliver value to customers and shareholders.” 2022 was a rocky year for Robinhood, as its stock plummeted significantly and the company also failed to maintain the growth rate that it had enjoyed in the bull run. 

It is crucial to note that, as per an earlier report from Bitnation, Bankman-Fried’s holding company, Emergent Fidelity Technologies, filed for bankruptcy. This is the firm that currently holds the 50 million Robinhood shares, which were purchased by SBF using funds from FTX’s sister company, Alameda Research. 

Moreover, the DoJ seized around 55,273,469 shares of Robinhood (HOOD) along with $20 million in cash from Emergent Fidelity Technologies, which were cited as the “only known assets” belonging to the holding company. Prior to the seizure by the DoJ, these shares were held by brokerage firm ED&F Man Capital Markets. These shares have been a point of contention among BlockFi, FTX creditor Yonathan Ben Shimon, and Bankman-Fried himself. 

“We continued to deliver on our product roadmap and kept our costs lean. On the capital management front, 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,” Jason Warnick, Chief Financial Officer of Robinhood Markets, stated. 

On the other hand, the earnings report also confirmed that Robinhood witnessed a 5% increase in its net total revenue, which came in at around $380 million. However, transaction-based revenues decreased 11% sequentially to $186 million in the fourth quarter of 2022, while net interest revenue increased 30% sequentially to $167 million.

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