Robinhood’s board of directors has approved a plan to buy out a $578 million stake in their company, which was bought last year by former FTX CEO Sam Bankman-Fried and FTX co-founder Gary Wang.
Robin Hood confirmed in its fourth-quarter report released on February 8, it says it has received approval from the board of directors to buy back the stake.
“Our advice has authorized us to proceed with the purchase of most or all of our shares, which Emergent Fidelity Technologies purchased in May 2022,” Robinhood CFO Jason Warnick said, adding:
“The proposed share purchase underscores the Board’s and management’s confidence in our business.”
The FTX co-founders bought 55 million shares of Robinhood worth $578 million at current prices in May through Emergent Fidelity Technologies, taking out loans directly from FTX subsidiary Alameda Research.
On Jan. 9, the US Department of Justice (DOJ) seized 55 million shares, about 7% of the company’s shares.
We have just announced our fourth quarter financial results. Find information about our activities at https://t.co/3l82Sx3F7d
— Robinhood Comms (@RobinhoodComms) February 8, 2023
The assets were forfeited following a lawsuit from cryptocurrency lending platform BlockFi demanding the return of the shares, as Bankman-Fried and Wang used the shares as collateral to obtain a loan from BlockFi.
Warnick told CNBC Feb. 8 that Robinhood is working with the Justice Department on a plan to facilitate buybacks, but nothing has been finalized yet.
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 Robinhood shares after the exchange crashed in November.
Meanwhile, while Emergent Fidelity did not file for bankruptcy in November, neither did FTX and other FTX-affiliates, the firm filed for bankruptcy protection on February 3.
Cryptocurrency revenue falls in the fourth quarter
On a trading platform in the US, cryptocurrency-based transaction revenue from the “Robinhood Web3 Wallet” fell 24% to $39 million in the fourth quarter compared to the third quarter. Revenue in the third quarter fell 12% compared to the second quarter.
Total net revenue increased 5% to $380 million in the fourth quarter of 2022. However, the company reported a total net loss of over $1 billion in 2022.
Robinhood Web3 wallet enters beta, uses Polygon as first blockchain
The fall in crypto-related revenue comes despite the firm being able to roll out the Robinhood Web3 wallet to more than 1 million users on a quarterly waitlist.
Just hours after the earnings report was released, Robinhood stock skyrocketed. HOOD, up 4.78% according to Google Finance.
Credit : cointelegraph.com
