FTX to Pay $14M to SBF’s Emergent Fidelity Technologies Over Robinhood Shares

For nearly two years, a cohort of crypto-focused entities have claimed ownership of over 55 million Robinhood shares (HOOD) bought for $600 million. Among them are the bankrupt crypto derivatives exchange FTX and Emergent Fidelity Technologies, an investment firm co-founded by the infamous FTX’s founder, Sam Bankman-Fried (SBF).

A recent court document revealed that FTX has agreed to pay $14 million to Emergent Fidelity to cover administrative expenses tied to the HOOD stash.

Emergent Fidelity to Emerge from Bankruptcy

SBF acquired the HOOD stash in May 2022 through Emergeny Fidelity. He owned 90% of the shares, while FTX’s co-founder Gary Wang owned 10%. The shares were pledged as collateral to secure loans from the crypto lender BlockFi for FTX’s sister firm, Alameda Research.

Following FTX’s sudden crash in November 2022, Bankman-Fried opted to retain ownership of the assets. During that same period, BlockFi also voiced ownership of the HOOD holdings.

The United States Department of Justice (DOJ) seized the HOOD stash in January 2023. According to a Bloomberg report, Emergent Fidelity filed for Chapter 11 bankruptcy protection in February with only $20.7 million in cash. In September 2023, Robinhood repurchased the HOOD holdings for $606 million.

The HOOD stash was valued at approximately $600 million at the time of acquisition. With a current trading price of $19.21, the 55 million HOOD shares are worth over $1.056 billion.

While Emergent Fidelity’s hearing is scheduled for October 22, its acceptance of FTX’s $14 million indicates that it will no longer pursue ownership of the Robinhood shares. The funds will also enable the firm to emerge from bankruptcy in Antigua.

Ripple Effect of FTX’s Collapse

The latest settlement would have been unnecessary if FTX never crashed. The exchange’s collapse has significantly shaken the crypto market, leaving various crypto projects scarred.

Under the current CEO, John Ray III, FTX has commenced plans to repay creditors. The latest settlement with Emergent Fidelity allows the firm to distribute more funds to creditors.