Robinhood has announced (1) its intention to acquire the large corporate share worth $578 million held by the troubled former CEO of FTX (SBF). SBF has a holding in Robinhood greater than 7%, and the company's board of directors approved a plan to repossess that stake.
On the other hand, the corporation that provides financial services has recognized that it cannot promise when or if the repurchase will occur.
Robinhood has stated that it is collaborating with the Department of Justice to make the transaction, which involves 55 million shares, as smooth as possible.
There has been a disagreement around these HOOD shares between SBF and many companies in the country and outside the world. BlockFi, a digital asset lending platform with its headquarters in New Jersey, is included in this group of companies.
Robbinhood Shares Jump on Buyback news
Following the SBF stake repurchase announcement and the release of Q4 2022 results, Robinhood's share price increased by 3% during after-hours trading. The company's quarterly net sales increased by 5% to a total of $380 million during the fourth quarter of the previous year.
In response to the recent event, the chief financial officer of the firm, Jason Warnick, offered the following explanation during an interview with the media:
"Our board of directors gave us the green light to purchase the shares of Robinhood that Emergent Fidelity Technologies, a subsidiary of FTX, had first purchased. And it is a significant concern that has been on the minds of shareholders, as well as a technical overhang, regarding what will occur with these shares.
Additionally, Warnick stated:
"The board has given us permission to go ahead and repurchase those, and at this time, we are having negotiations with the DOJ about that. It isn't easy to speculate on what exactly the schedule will entail.
Nevertheless, Robinhood committed to giving "updates as necessary" in its earnings report concerning the share acquisition.
In a document made on January 20th, the Department of Justice (DOJ), which confiscated SBF's investment in Robinhood, disclosed that the former top executive of FTX possessed 55,273,469 shares in HOOD. In May of this year, SBF made the initial acquisition of the sizeable stake, which at the time represented 7.6% of Robinhood's total capitalization.
Emergent Fidelity Technologies served as the intermediary for the share transaction, estimated to have an initial value of $649 million. On the other hand, as of the end of business on Wednesday, the value of the shareholding was little more than $578 million.
Along with fellow FTX co-founder Gary Wang, SBF acted as the only director of Emergent Fidelity and owned the bulk of the company's shares.
Per the documents filed with the court, Bankman-Fried and Wang obtained loans straight from Alameda Research to fund the share acquisition. In addition, these shares are at the center of a legal dispute involving FTX, SBF, BlockFi, and many other foreign businesses.
Federal Action Robinhood
At the beginning of this month, there were allegations that the Department of Justice (DOJ) had confiscated $465 million worth of Robinhood shares and an extra $20 million in fiat cash.
At the time, the United States Department of Justice had indicated that the assets that had been confiscated were pertinent to the ongoing criminal investigation against SBF.
The Department of Justice also mentioned that SBF, BlockFi, and Jonathan Ben Shimon, a creditor of FTX, had all made rival assertions about the Robinhood stock in the past.
In addition, the federal executive department disclosed that Bankman-Fried attempted to gain access to the HOOD shares so that he could pay his legal bills with them.