(Kitco News) -
Bankrupt cryptocurrency exchange FTX has asked a U.S. court to freeze former CEO Sam Bankman-Fried’s $441 million worth of Robinhood shares after bankrupt crypto lender BlockFi made a claim on them.
BlockFi was one of the first victims of the ongoing contagion in the crypto ecosystem that was unleashed in the wake of the Nov. 11 bankruptcies of FTX and hedge fund Alameda Research. BlockFi announced that they had “significant exposure” to FTX, including “obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US,” and the company was forced to declare its own bankruptcy on Nov. 28.
Last month, the crypto lender filed a motion to sue Emergent Fidelity Technologies, a company owned by Sam Bankman-Fried, for the 56 million shares of Robinhood it held, arguing that Alameda had pledged the stock to back $680 million in loans promised to BlockFi.
“BlockFi is entitled to use and possession of the Collateral under the Pledge Agreement because Emergent defaulted on its obligations thereunder and failed to cure the default,” they wrote in the motion. “The Collateral is property of the BlockFi bankruptcy estates and is valuable and beneficial to the BlockFi bankruptcy estates.”
On Thursday, FTX filed its own motion, which revealed that there are at least three competing claims on the Robinhood shares, including one from SBF himself. “Since the commencement of these chapter 11 cases, three different competing stakeholders of the Debtors have filed court actions in different jurisdictions to gain control of the Robinhood Shares to collect on claims against the Debtors,” including BlockFi, a creditor of FTX Trading named Yonathan Ben Shimon, “and Mr. Bankman-Fried himself (who has repeatedly sought a source of payment for legal expenses).”
FTX wrote that their investigation “indicates that the Robinhood Shares are property of the Debtors’ estates, held only nominally by Emergent,” and they have asked the US bankruptcy court in Delaware for an automatic stay on the stock until these competing claims are formally resolved.
The motion states that “just two days before the Debtors (including FTX Trading and Alameda) filed for bankruptcy, BlockFi scrambled to protect itself from impending losses on antecedent loans by threatening to seek remedies against Alameda” if the hedge fund didn’t pledge additional collateral to back their loan commitments to them.
“In response to those threats, and despite the perilous financial of Alameda and the other Debtors, Alameda’s then-CEO Caroline Ellison, with knowledge and encouragement from Mr. Bankman-Fried, purportedly agreed to pledge over $1 billion worth of additional Alameda assets,” they wrote. “The Robinhood Shares were included in these pledged assets by Alameda’s then-CEO, despite the fact that the Robinhood Shares were nominally held by Emergent, because Alameda had then, and continues to have, a property interest in the Robinhood Shares.”
Robinhood stock is trading at $7.88 at the time of writing, making the total value of the stake in question approximately $441.3 million. A hearing on the motion by FTX has not yet been scheduled.
