The directors of the board of Robinhood have approved a plan to repurchase the $578 million stake in the company purchased last year by former FTX CEO Sam Bankman-Fried and FTX co-founder Gary Wang.
Robinhood confirmed in its fourth-quarter report, published on February 8 that it received board approval to buy back the stake.
“Our Board has authorized us to pursue the purchase of most or all of our shares purchased by Emergent Fidelity Technologies in May 2022,” Robinhood’s chief financial officer Jason Warnick said.
“The proposed share purchase demonstrates the Board of Directors’ and management team’s confidence in our business.”
In May, the FTX co-founders purchased 55 million shares of Robinhood stock, worth $578 million at current prices, through Emergent Fidelity Technologies, using loans from FTX’s sister firm Alameda Research.
On January 9, the US Department of Justice (DOJ) seized the 55 million shares, which amounted to roughly 7% of the company.
The assets were seized due to a court filing by cryptocurrency lending platform BlockFi to reclaim the shares, which Bankman-Fried and Wang used as collateral to obtain a loan from BlockFi.
On February 8, Warnick told CNBC that Robinhood has been working with the Justice Department plan to buyback, but nothing has been finalized.
The shares in question also have been involved in several legal battles. Following the collapse of the exchange in November, FTX asked the court on December 23 to stop BlockFi from claiming the Robinhood shares.
In the meantime, while Emergent Fidelity did not file for Chapter 11 bankruptcy like the FTX and other FTX-affiliated entities, the firm did file for bankruptcy protection on February 3.
Crypto revenue fell in the fourth quarter.
The cryptocurrency-based transaction revenues from the trading platform’s “Robinhood Web3 Wallet” fell 24% quarter on quarter to $39 million in the fourth quarter. In Q3, these figures decreased by 12% as well.
In Q4 2022, net revenues increased by 5% to $380 million. The company has also reported a net loss of more than $1 billion in 2022.
Despite successfully launching the Robinhood Web3 Wallet to over 1 million waitlisted users during the quarter, crypto-related revenue fell. According to Google Finance, Robinhood’s stock, ticker HOOD, is up 4.78% in the few hours since the earnings report was released.
