Cryptocurrency platform FTX declared bankruptcy in 2022, sending the cryptocurrency market lower and leading to charges against CEO and co-founder Sam Bankman-Fried, who was later found guilty on fraud charges.
Before the bankruptcy and Bankman-Fried’s collapse, the cryptocurrency figure had taken a stake in investing platform Robinhood Markets Inc (NASDAQ:HOOD).
Here’s a look back at the investment and how investors could have profited following along with the story.
What Happened: Bankman-Fried was found guilty of all criminal charges including wire fraud, conspiracy to commit wire fraud, securities fraud, commodities fraud, and money laundering in November 2023.
The trial came after Bankman-Fried’s arrest and charges related to his time leading FTX, which declared bankruptcy in November 2022.
Funds from FTX customers were found to be used by Bankman-Fried and the company for non-crypto-related activities.
In May 2022, a 13D filing revealed that Emergent Fidelity Technologies and Bankman-Fried purchased 56,273,469 shares of Robinhood, representing 7.6% ownership of the company.
News of the purchase sent Robinhood shares higher with possibilities of the companies working together or FTX acquiring the company outright, which was later shot down as a possible outcome.
The stake in Robinhood held by Bankman-Fried would later generate numerous headlines with creditors looking to take hold of the stake or sell it to recapture losses from FTX.
In December 2022, new FTX CEO John Ray III requested the Robinhood shares to be frozen due to demand and until an outcome could be reached.
Bankman-Fried was also reported to seek control over the Robinhood shares in January 2023.
On Jan. 4, 2023, it was announced that the U.S. Department of Justice seized the $465 million worth of Robinhood shares and could make them part of the bankruptcy estate.
In September 2023, the Robinhood shares made their way back home with the company agreeing to repurchase 55.3 million shares from the U.S. government for $605.7 million, representing nearly the entire original purchase by Bankman-Fried.
Here’s a look at how investors could have profited from the storyline.
Related Link: Robinhood Q3 Earnings: EPS Beat, Revenue Up 29%, MAUs Fall 16% And More
Investing $1,000 in Robinhood Stock: News of the Department of Justice…
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