Robinhood’s Is Buying Back Sam Bankman-Fried’s Stake in the Business, Stock Soars
Key takeaways
- Robinhood has repurchased $605 million in shares that belonged to Sam Bankman-Fried
- Disgraced FTX founder originally bought a 7.5% stake in the company last year
- Robinhood’s share price rose as much as 3.8% at the news
Retail investor app Robinhood has taken back the narrative and repurchased the stake originally owned by crypto darling and alleged fraud extraordinaire Sam Bankman-Fried. The company is now left $600 million lighter at the move, but Wall Street rewarded Robinhood with a boost to its share price at the announcement. Here’s the latest.
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What’s the latest with Robinhood?
Robinhood, one of the unfortunate players in the 2021 Gamestop drama, has officially repurchased the company shares that once belonged to disgraced crypto bro Sam Bankman-Fried.
The former CEO of the now-collapsed crypto exchange FTX, currently in prison and facing a host of criminal charges, bought a 7.5% stake in retail trading app Robinhood in 2022. FTX and Bankman-Fried’s spectacular fall from grace left Robinhood with a real problem, given that SBF had financed the deal with a loan from Alameda Research.
Robinhood has decided to remove itself from the drama and completed a share purchase agreement with the U.S. Mashall Service to buy back 554 million of its shares for $605 million. Robinhood has a market cap of around $10 billion.
How did Wall Street react?
Robinhood shares rose as much as 3.8% during Friday trading, which is a reminder that Bankman-Fried’s name is still incredibly toxic, with the stock eventually closing 2% higher. Robinhood stock has gained 37.5% so far this year and is currently trading at $11.11.
Robinhood first disclosed its intentions to buy back the stake in February, with the 55.93 million shares sold at $10.96 each. The district judge who approved the share purchase agreement said it was “appropriate” and “in the best interest of the relevant stakeholders”.
As for Sam Bankman-Fried? He was sent to prison ahead of his October trial on the basis that he likely tampered with witnesses while confined to his parents’ Palo Alto residence. At his peak, SBF was estimated to be worth $26 billion thanks to his crypto empire and an influential political donor.
The bottom line
Given there were rumors that SBF might one day buy Robinhood, the tables have well and truly turned. Robinhood has removed itself from the situation, and investors liked the move, but the association may linger in the public’s memories for years to come. We imagine Robinhood’s board won’t forget this mistake any time soon, either.
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