The enigmatic tale of Robinhood and Same Bankman-Fried (‘SBF’) took another twist recently with a $605.7 million share buyback agreement. This move sees Robinhood reclaiming shares once held by SBF through Emergent Fidelity Technologies, that were subsequently seized by the US government amidst FTX’s bankruptcy proceedings.
Let us take a quick glimpse at the history which has led up to this point. Not long ago, SBF, who had co-founded FTX with Gary Wang, possessed a 7.6% stake in Robinhood. In his statement, he had no visions of taking over the retail trading platform. His view was fuelled more by the promising prospects of potential collaborations between Robinhood and FTX. However, the bankruptcy protection filed by FTX and Emergent in 2022 triggered changes that altered the trajectory.
The landscape post-collapse of SBF’s company FTX saw 55 million HOOD shares initially procured by the US Government. The shift in ownership didn’t dim Robinhood’s eyes set on the prize. Back in February, Robinhood enthusiastically announced its ambition to repurchase the shares. The intention was clear – to explore an acquisition of a significant part of the pie, if not the whole.
The official approval of the share repurchase agreement, allowing Robinhood to proceed with purchasing this stake, was given by the US District Court for the Southern District of New York at the end of August. The buyback involved 55.3 million shares, quoted at $10.96 each. Robinhood’s intentions were met with investor approval, causing the company’s shares to experience a pre-market trading surge of over 3%.
Meanwhile, SBF is amidst a storm of legal challenges relating to the bankruptcy fallout. Starting his crypto journey trading Bitcoin in 2017 and later co-founding Alameda Research, SBF’s fortune ballooned to approximately $26 billion, mostly from booming assets like Bitcoin. The tables turned abruptly when FTX’s collapse wiped out his fortune, landing him in hot water. He now faces serious charges, including fraud and conspiracy tied to the downfall of his exchange in November.
In the courtroom, SBF maintains a stand of not-guilty, challenging his detention, that some argue, hinders trial preparations. Outside the courtroom, Robinhood has severed its ties with Jump Trading, a conventional finance player that executed crypto transactions for the commission-free broker.
In essence, Robinhood’s share buyback is a complex ballgame interwoven with bankruptcy, legal challenges, and corporate separations. On the one hand, it opens up opportunities for the platform, on the other, it raises multiple questions about the future of crypto markets and regulations.
Source: Cryptonews
