Sam Bankman-Fried is struggling to control a $450 million stake in Robinhood
Sam Bankman-Fried, founder of FTX, is fighting for control of $450 million in Robinhood stock.
Legal battle over $450 million in Robinhood stock
Bankman-Fried and Robinhood shares are currently owned by Bankman-Fried and co-founder Gary Wang through holding company Emergent Fidelity Technologies.
However, the bankrupt cryptocurrency exchange FTX, founded by Bankman-Fried, disputes this claim and argues that the shares should be frozen so that they can be divided among FTX creditors.
The US Department of Justice also announced that it would forfeit the shares as part of the proceedings against Bankman-Fried, who pleads not guilty to several counts.
The legal battle over Robinhood shares is complex and involves multiple parties. In addition to FTX and the US Department of Justice, bankrupt cryptocurrency lender BlockFi is also involved.
FTX filed with Delaware bankruptcy court on December 22, stating that the shares in question are only nominally owned by Emergent Fidelity and therefore should be frozen. This claim was supported by the individuals responsible for winding up the company in the Bahamas.
Bankman-Fried disputed FTX’s claim, arguing that he and Wang legitimately purchased the shares using money borrowed from FTX’s trading arm, Alameda Research.
In a filing Thursday, attorneys for Bankman-Fried said the loan was documented and that it was inappropriate for FTX to assume that everything Bankman-Fried touched was fraudulent. BlockFi has filed a separate filing opposing the bid to take over the stock.
The legal row over Robinhood shares may eventually prove academic, as the US Department of Justice announced it would forfeit the shares as part of its action against Bankman-Fried. On November 11, the CEO resigned from FTX the same day the company collapsed over allegations of blurred lines between FTX and Alameda.
FTX filed a claim with Delaware bankruptcy court stating that Emergent Fidelity, owned mostly by Man-Fried Bank (90%) and in part by Wang (10%), was a shell company with interests “sufficiently identical” to those of the larger company.
Restructuring expert John Ray, who now runs FTX, complained about flaws in the company’s record-keeping, including the lack of proper loan documentation for transfers made to employees.