On Wednesday, Robinhood Markets said that it would attempt to buy back the shares that had been purchased by the former CEO of the FTX crypto exchange, Sam Bankman-Fried.
The former crypto billionaire has a 7.6% share in Robinhood and this has become a point of contention in the bankruptcy of the now-defunct exchange as well as in the criminal case of Sam Bankman-Fried.
Vlad Tenev, the Robinhood CEO, spoke in an earnings call with analysts and investors and said that buying back the shares would help eliminate a distraction for shareholders.
He also said that the board of directors of the company had already given their approval for the purchase of almost 55 million shares.
After the announcement, there was a rise in Robinhood shares of about 5%, as they reached a value of $11 in after-hours trading.
Robinhood is cooperating with the Department of Justice, but it did not share a timeline about when the purchase would be complete.
Tenev stated that there is no precedent in place for such situations, so they cannot predict how long it would take.
The shares had been purchased by Bankman-Fried and Gary Wang, who is also the co-founder of FTX, last year in May.
The shares were purchased via a holding company named Emergent Fidelity Technologies.
Last December, a court document revealed that Bankman-Fried and Wang had taken a loan from Alameda Research, the trading firm founded by SBF, worth $546 million to buy the said shares.
Last month, the US Department of Justice (DOJ) disclosed that the shares were now in its custody, which was valued at about $450 million at the time.
However, the problem is that BlockFi, the now-defunct crypto lender, has also laid a claim to these Robinhood shares, as it claims that they were pledged to the company under an agreement that was made in November.
A motion was recently filed by Sam Bankman-Fried’s attorneys for keeping possession of the equities, as they argued that they would need them to pay for his criminal defense.
The lawyers said that the debtors of FTX should not be allowed to secure the funds because they have not been able to demonstrate that they are entitled to such a relief.
According to a press release, the company said that its trading platform had seen a decline in revenue from cryptocurrencies because prices had chilled in the final months of 2022.
Therefore, revenue had seen a 24% decline in the final quarter of the previous year to $39 million. The company also said that there had been a decline in the total amount of assets on its platform under custody.
They had declined for the fourth quarter in a row from $98 billion a year earlier to $62 billion. There had also been a 62% drop in the amount of cryptocurrencies on its platform.
They had come down from $22 billion to a figure of just $8 billion. The final quarter had seen its crypto business dampen, but the start of the year had seen a rebound in activity.