Robinhood hopes to buy back 55 million shares from Sam Bankman-Fried’s Emergent Fidelity Technologies.
The trading platform said during its earnings call on Wednesday (Feb. 8) that its board had approved its pursuit of the shares, worth 7.6% of the company.
“We believe it will be accretive over time and removes a distraction for shareholders,” Chief Executive Vlad Tenev said during the call.
Chief Financial Officer Jason Warnick added, “We’re confident in the future of our business, so we think it would be a smart use of our excess corporate cash to buy most or all of the roughly 55 million shares while continuing to have a strong balance sheet to invest for growth.”
However, Tenev cautioned that because “there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place.”
FTX founder Bankman-Fried purchased the shares last year through Emergent, though their ownership has become the subject of a legal dispute following FTX’s bankruptcy and the Department of Justice prosecution of Bankman-Fried.
Prosecutors last month seized nearly $700 million in assets from Bankman-Fried, primarily in the form of Robinhood shares, worth $575 million as of Thursday (Feb. 9) morning.
Bankman-Fried, 30, has been charged with multiple counts of fraud and conspiracy connected to the implosion of FTX last fall. He has pleaded not guilty in court and maintained his innocence in public statements, and has said he needs the Robinhood shares to pay for his defense.
“Mr. Bankman-Fried has not been found criminally or civilly liable for fraud, and it is improper for the FTX Debtors to ask the Court to simply assume that everything Mr. Bankman-Fried ever touched is presumptively fraudulent,” his attorneys said in a court filing.
Other parties have laid claim to the shares as well, including FTX, Emergent — which filed for bankruptcy last week — and crypto lender BlockFi.
BlockFi sued Bankman-Fried in November to recover the shares, soon after its own bankruptcy filing, which stemmed from a liquidity crisis caused by the firm’s exposure to FTX.
As PYMNTS reported, BlockFi and FTX claim to own the shares, and both companies want to use them to recover from their debts. The shares reportedly played a key role in the lead-up to FTX’s collapse, as they were touted as some of the company’s most valuable liquid assets as it tried to attract new financing.