The broker's connection to the former FTX CEO once hurt the stock, but it looks like the overhang is now cleared.
Robinhood Markets has cleared an overhang for its stock after buying back shares in the company once owned by Sam Bankman-Fried, the former CEO of collapsed cryptocurrency exchange FTX who faces a litany of criminal charges.
Robinhood stock rose 3.2% in premarket trading on Friday after the retail-focused broker detailed in a filing that it had on Thursday completed a share purchase agreement with the U.S. Marshall Service. Robinhood said it had bought more than 55 million shares of its own stock from the agency for some $605 million.
The ownership stake—a sizable chunk of the company, which has a market capitalization just shy of $10 billion—was once owned by entities controlled by Bankman-Fried. The future of the shares, including whether or not they would be sold as part of FTX’s bankruptcy process, had been an overhang on Robinhood stock.
Bankman-Fried bought a 7.5% stake in Robinhood in May 2022, when his empire was intact and he was still seen as the industry’s golden boy and even a potential majority owner of Robinhood. Six months later, FTX—once valued at $32 billion—plunged into bankruptcy, with billions of dollars in customer funds missing and Bankman-Fried arrested on charges of fraud. He has pleaded not guilty.
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