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Commission-free brokerage platform Robinhood Markets Inc saw its investors unfazed as its shares closed up 3.47% on Wednesday despite being indicted in the ongoing legal brawl involving the bankrupt FTX empire. As reported by Fox Business, the United States Department of Justice (DOJ) is set to seize the sum of $465 million in Robinhood shares allegedly belonging to Sam Bankman-Fried, bankrupt crypto lender BlockFi and FTX creditor Yonathan Ben Shimon.
This move comes as one of the major stumbling blocks to FTX creditors as DOJ attorney Judge Seth Shapiro told Judge John Dorsey that they remain unconvinced that the shares are tied to the exchange's bankruptcy estate.
Sam Bankman-Fried reportedly bought a 7.42% stake in Robinhood, an investment it made through one of his companies, Emergent Fidelity Technologies Inc. The acquisition was financed through a loan he secured from Alameda Research, the trading firm he allegedly used to siphon funds from FTX customers.
With the 56 million shares of Robinhood now set to be seized by U.S. prosecutors, there is a signal that the trading firm's investors will not be impacted despite the huge sum being taken out of circulation.
Further strain on Robinhood's crypto ties
It is not uncommon to find prominent mainstream brokerage platforms like Robinhood venturing into the crypto ecosystem, as many use the emerging industry as a means to gain additional market shares.
At this time, the crypto ecosystem is not at its best amid an excruciating crypto winter that has lasted for close to a year. Despite these obvious market strains, Robinhood has been making targeted investments into some of the most traded digital currencies, including Dogecoin (DOGE), per an earlier report by U.Today.
It remains unclear how the current FTX indictment will affect Robinhood in the long term, but in the meantime, the firm maintains its outlook as a major hub for commission-free crypto trading.
Gamza Khanzadaev
Tomiwabold Olajide
Vladislav Sopov
Dan Burgin