FTX resolves $600M Robinhood shares claim in settlement with Emergent

FTX has reached a settlement with Emergent Technologies to end a disagreement over $600 million in Robinhood shares. 

As part of the deal, FTX will give Emergent $14 million to cover its costs, and in return, Emergent will no longer claim the shares. This deal is important because it helps FTX get more money for the people it owes and avoid more legal fees.

The Robinhood shares have been a disputed asset since FTX went bankrupt in November 2022. FTX was a popular cryptocurrency exchange that collapsed due to a series of financial mismanagement issues. 

The trouble began when a news article revealed that Alameda Research, a trading firm closely linked to FTX, had a balance sheet heavily reliant on FTX’s own token – FTT. This raised concerns about the financial health of both companies.

As fears grew, many customers started withdrawing their funds from FTX, similar to a bank run. This sudden demand for withdrawals exposed a huge gap in FTX’s finances, revealing that they owed around $8 billion more than they had. On November 11, 2022, FTX filed for bankruptcy, and its CEO, Sam Bankman-Fried, stepped down.

Emergent received about 56 million shares through a deal with Sam Bankman-Fried and Alameda Research. After FTX went bankrupt, several groups, including FTX and Emergent, said the shares belonged to them. 

Full details about the FTX, Robinhood story

In January 2023, the U.S. Department of Justice took control of the shares as part of its investigation into FTX.

On September 1, 2023, Robinhood repurchased the shares for around $606 million, effectively liquidating them. The settlement not only resolves the dispute but also helps Emergent move forward with its own bankruptcy case in Antigua. 

FTX CEO John Ray III said that the agreement was reached through good faith negotiations, ensuring transparency in the process. A hearing to approve the settlement is scheduled for October 22, marking a crucial step in FTX’s ongoing bankruptcy proceedings.