Robinhood Markets Inc., the U.S.-based financial services company, plans to purchase the 55 million of its shares that FTX-linked Emergent Fidelity Technologies bought in May 2022, according to its earnings report released Wednesday. The shares, worth more than US$550 million, are the subject of a creditor dispute in the FTX bankruptcy.

The FTX exchange founder Sam Bankman-Fried and cofounder Gary Wang last year formed Emergent Fidelity to purchase 56 million Robinhood shares with US$546 million in loans from Alameda Research, the brokerage arm of FTX.

Robinhood said in its earnings report:

“The proposed share purchase underscores the confidence the Board of Directors and management team have in our business,”

However, ownership of the shares is in dispute among three parties — bankrupt crypto lender BlockFi, FTX creditor Yonathan Ben Shimon, and Bankman-Fried. All three have filed court actions to gain control of the stake.

Last month, the U.S. Department of Justice said in a court filing that it has seized the shares. Robinhood said it’s in discussions with the DoJ about buying back the stake.

FTX collapsed in November 2022 after it ran out of funds to meet customer withdrawals. U.S. Federal prosecutors later charged Bankman-Fried with a list of financial crimes, including securities fraud, money laundering, and campaign finance violations.

Last week, Emergent Fidelity filed for Chapter 11 bankruptcy protection at the United States Bankruptcy Court for the District of Delaware. FTX and dozens of its affiliates filed for bankruptcy on Nov. 11 last year.

In the fourth quarter of 2022, Robinhood’s cryptocurrency revenue fell 24% to US$39 million from the previous quarter, according to its earnings report.

What do you think about the steps Robinhood is taking to repurchase the shares seized by the Department of Justice in the wake of the FTX failure? Drop your comments by sharing this article online.


Feb 9, 2023
Crypto News

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