U.S. Department of Justice seizes close to $450 Million in Robinhood shares from FTX
Hey Peeps!
In a bankruptcy court hearing on January 4th, the United Stated Department of Justice (DoJ) announced they had seized around $450 million worth of Robinhood shares from FTX.
The ownership of these 56 million shares of Robinhood stock are currently disputed by BlockFi, FTX, and even Sam Bankman-Fried.
On January 5th, Sam Bankman-Fried's legal team filed a request to claim ownership of the disputed Robinhood shares, as they are needed to fund his legal defense.
In May of 2022, Sam Bankman-Fried and FTX co-founder Gary Wang formed a company called Emergent Fidelity Technologies to purchase a 7.42% stake in Robinhood, equaling about $600 million at the time.
"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. Mr. Bankman-Fried requires some of these funds to pay for his criminal defense. The withholding of costs necessary to an adequate criminal defense can constitute irreparable harm. Conversely, the FTX Debtors face only the possibility of economic loss." - Gregory T. Donilon, Partner at Montgomery McCracken Walker & Rhoads
Back in November, BlockFi filed a motion to sue Emergent and to claim ownership of the Robinhood shares; arguing that Alameda had pledged the stock to back $680 million in loans promised to BlockFi.
FTX then filed its own motion on December 22nd to ask the courts to freeze the Robinhood shares.
“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. The Collateral is property of the BlockFi bankruptcy estates and is valuable and beneficial to the BlockFi bankruptcy estates.” - Michael D. Sirota, Attorney for Cole Schotz
This is one giant cluster of drama and chaos as multiple companies and individuals are fighting desperately over this small fortune.
It is also quite humorous and sad at the same time that SBF is claiming he needs $450 million to defend himself, while customers should just accept their monetary loss.
All I care about is the affected customers getting their money back, so at the end of the day I hope this money somehow works its way to them.
Who do you think is the true owner of these Robinhood shares?
Should the Justice department be stepping in like this?
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