Sam Bankman-Fried, the disgraced founder of crypto exchange FTX, has claimed the ownership of the contested 56 million shares of the financial trading app Robinhood. Worth about $450 million, several separate entities have laid claim to the shares, including crypto firm BlockFi and liquidators in Antigua. The shares were initially purchased by a holding company owned by SBF and FTX co-founder Gary Wang using borrowed funds from Alameda Research.
Several Entities Lay Claim on Contested Robinhood Shares
In early 2022, Bankman-Fried purchased a nearly 7.6% stake in Robinhood that was financed with a loan from his own hedge fund, Alameda Research. In an affidavit that emerged in late December, Bankman-Fried said he and FTX co-founder Gary Wang borrowed more than $546 million from Alameda to buy the shares.
The shares are owned by Bankman-Fried and Wang through a holding company called Emergent Fidelity Technologies. However, the assets are now at the center of a multinational legal battle, with multiple separate entities laying claims on the shares.
A total of four separate entities have laid claim to the approximately 56 million shares. Bankrupt crypto lender BlockFi, an FTX creditor, and the exchange’s new management, which is trying to claw back funds for investors and customers of the bankrupt platform, are trying to keep a grasp of the shares.
The US government has also recently stepped into the legal battle to retain control of the shares. The Justice Department said Wednesday that it has moved to seize millions of shares of Robinhood, whose ownership is disputed among some FTX creditors.
“We believe that these assets are not the property of the bankruptcy estate or that they fall within the exceptions… of bankruptcy code,” Seth Shapiro, a Justice Department attorney, said, adding that competing claims to shares of the stock-trading app could be worked out in a forfeiture proceeding.
SBF Claims He Needs Robinhood Shares to Pay Legal Costs
Bankman-Fried himself is also seeking to retain control of the shares. The disgraced crypto boss has filed a court action asking to block debtors from taking control of the shares.
SBF’s lawyers have reportedly argued that the shares are owned by a holding company called Emergent Fidelity Technologies, which is not an FTX-related entity. In a filing made Thursday, he said:
“The FTX Debtors seek to disregard the separate existence of a corporation that is not a party to this action and encumber hundreds of millions of dollars’ worth of assets to which they have no legal claim.”
Furthermore, the petition claimed that Bankman-Fried needed the money to fund his legal expenses. It also argued that the preliminary relief would cause irreparable damage to SBF as he wouldn’t be able to defend himself. It said:
“The balance of equities weighs in favor of refusing to enforce or extend the stay. Alienating this property from Emergent will render it inaccessible to Mr. Bankman-Fried, who is presently facing potential criminal liability. Mr. Bankman-Fried requires some of these funds to pay for his criminal defense.”
As reported, Bahaman authorities arrested Bankman-Fried in December last year after US prosecutors formally filed criminal charges against him. After around a week in Bahamian custody, the crypto boss was extradited to the US to face a litany of criminal charges.
The Securities and Exchange Commission charged SBF with “orchestrating a scheme to defraud equity investors in FTX.” The Southern District of New York has indicted SBF on eight criminal charges, including wire fraud and conspiracy by misusing customer funds.
This article originally appeared on The Tokenist
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