The board of directors of Robinhood has approved a plan to buy up to 55 million shares bought by Sam Bankman-Fried last year. The ex-CEO of the now bankrupt crypto exchange FTX originally purchased his stake in May 2022 through Emergent Fidelity Technologies.
The retail brokerage is working with the Department of Justice, which seized the shares in January, to facilitate the move.
Shares of Robinhood are up more than 3% in after-hours trading following the release of its quarterly earnings report that showed net revenue rising 5% from last quarter to $380 million.
"Our board authorized us to buy the shares of Robinhood that were originally acquired by Emergent Fidelity Technologies, that FTX subsidiary," Robinhood Chief Financial Officer Jason Warnick told CNBC.
"And that's been a big question on shareholders' minds, and a technical overhang, what's going to happen with these shares," Warnick said.
"The board has authorized us to go and repurchase those and so we're in discussions with the DOJ on that. Hard to tell exactly what the timeline is going to be," Warnick added.
"Since there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place. We will provide updates as appropriate," the company said in its earnings report release.
According to a Jan. 20 filing by the DOJ, Bankman-Fried held 55,273,469 Robinhood shares, over 7% of the company's outstanding shares. As of Wednesday's close, that stake is valued at over $578 million.
Emergent Fidelity was controlled by both Bankman-Fried and fellow FTX co-founder Gary Wang. Both Wang and Bankman-Fried took out loans directly from Alameda Research to fund the acquisition, according to court filings. The shares are also at the heart of a contentious court battle between FTX, Bankman-Fried, crypto lender BlockFi and a set of international entities.
— CNBC's Kate Rooney contributed to this report.