Online stock and cryptocurrency brokerage Robinhood has announced its decision to repurchase shares initially bought by Sam Bankman-Fried, the founder of crypto exchange FTX and Emergent Fidelity Technologies. The shares, amounting to 55.3 million, came under U.S. government control following the bankruptcy of FTX and Emergent and the subsequent indictment of Bankman-Fried on charges of fraud and conspiracy. Robinhood is set to pay $605.7 million for the repurchase.
The stock was seized by the United States Marshals Service (USMS) and became government property after FTX and Emergent filed for bankruptcy in 2022. The failure of the exchange led to the arrest of Bankman-Fried, whose trial is slated to start in October. The shares were initially purchased by Bankman-Fried’s company six months prior to its bankruptcy filing.
The repurchase was sanctioned by U.S. District Judge Lewis Kaplan, who is overseeing Bankman-Fried’s legal case. Judge Kaplan described the proposed share purchase agreement as “appropriate” and in the best interests of the relevant stakeholders.
FTX filed for bankruptcy following liquidity issues and its founder has been accused of diverting billions of U.S. dollars of the exchange’s customer funds for personal expenses, such as buying high-end property, making political donations, and funding other businesses like the Alameda Research hedge fund.
Bankman-Fried had purchased a 7.6% stake in Robinhood Markets six months before FTX’s bankruptcy. At the time, he expressed no intention of taking over Robinhood but showed interest in a partnership. He was arrested in the Bahamas and extradited to the U.S. about a month after FTX’s collapse. Initially placed under house arrest, his $250 million bond was revoked, and he was jailed in August on allegations of witness tampering.