Robinhood Board Approves Buyback Of Sam Bankman-Fried's 55 Million Shares
Executives disclosed the action plan to repurchase the shares in a Q4 financial report released on Wednesday, February 8, 2023. The company’s CFO Jason Warnick noted that approval from the board signals confidence in Robinhood’s business despite suffering $1 billion in net losses in 2022.
We just announced our financial results for the fourth quarter. Find information on our performance at https://t.co/3l82Sx3F7d
Crypto transactions on the Menlo Park-based stock broker dipped to $39 million in Q4 2022, a 39% drop from Q3. Net revenues in Q4 did grow to $380 million, recording a 5% increase in the later stages of last year. Robinhood had hoped that launching its Web3 Wallet tool would shore up the balance sheet and rake in more cash from the digital asset ecosystem.
SBF Leveraged Alameda Loans To Buy Robinhood Stake
The FTX Founder confirmed that loans from Alamada Research funded an investment in Robinhood worth $600 million at the time, per filings made at an Antiguan court in December. Sam Bankman-Fried said both he and former FTX CTO Gary Wang agreed to deploy capital from FTX’s sister firm Alameda toward the huge stock buy in May.
Both former execs of the bankrupt crypto exchange acquired a 7.6% stake in the stockbroker through Emergent Fidelity Technologies, a holding company solely controlled by SBF and Wang.
Justice Department Seized SBF’s Robinhood Shares
Robinhood could face an uphill battle in buying back the shares as the U.S. Department of Justice seized SBF’s stake in the stockbroker earlier in January. At current prices, the shares are worth around $570 million, slightly lower than the $600 million valuation they held in May.
The seizure came weeks after entities like BlockFi, FTX, and individual creditors tussled over the shares. CFO Warnick told CNBC that his company was liaising with the DOJ on how to legally claim the shares following approval from the board.
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