According to a filing with the SEC on Thursday, Robinhood bought back the shares that had once belonged to Sam Bankman Fried, the FTX co-founder, worth $606 million.
This came after a court had granted approval of the buyback earlier in the week. In January, the shares had been taken into custody by the US Department of Justice (DOJ).
The filing
The value of the shares in question at the time had been around $450 million. Just a month earlier, Bankman-Fried had been arrested and a dozen charges were brought against him.
This was after his crypto exchange had collapsed in November last year. He has pled not guilty to the charges and is now awaiting trial that will begin in October.
In the filing on Thursday, Robinhood said that they had repurchased the shares of the FTX founder with the corporate cash that they had on their balance sheet.
District Judge Lewis Kaplan is overseeing the criminal fraud case of Bankman-Fried and he had said that a deal could take place.
The judge said that the offer from Robinhood could have been rejected by the DOJ, if it would have been in favor of people associated with the alleged crimes of the disgraced crypto mogul.
The shares
The judge said that a private sale of the shares in Robinhood can be authorized by the US Marshall Service or their designees.
He also added that the relevant stakeholders would benefit from the said move. At the time of writing, Robinhood shares saw a rise in their price by 3% and the market cap of the company surpassed $10 billion.
On Friday, Jason Warnick, the Chief Financial Officer (CFO) of Robinhood, said that they were happy to have bought back the 7.6% shares that had belonged to Sam Bankman-Fried.
There had been a rise in the price of Robinhood shares previously after Vlad Tenev, its CEO, revealed that the repurchase had been approved by the company’s board of directors.
This prompted them to increase by almost 5% in after-hours trading. The chief executive said that this would eliminate a distraction for the company’s shareholders.
Further details
Gary Wang, FTX co-founder, along with Bankman-Fried, had bought the shares in Robinhood months before the crypto exchange had collapsed.
Wang has pled guilty to crimes related to the downfall of the exchange. The purchase of the shares was made through Emergent Fidelity Technologies, a holding company.
Last December, a court filing revealed that a loan of $546 million had been taken by Bankman-Fried and Wang from Alameda Research, the sister trading company of FTX.
The inner circle of FTX and Bankman-Fried have been accused of using customer funds to make exorbitant loans, amongst other activities.
A lawsuit had been filed against Bankman-Fried by crypto lender BlockFi, not long after FTX had collapsed.
The lender said in the lawsuit that the shares in Robinhood had been pledged to it in an agreement that had been made before the exchange went defunct.
On Wednesday, the order issued by Kaplan stated that BlockFi should be notified if the Robinhood deal does not go through.