DOJ to Seize USD 465 Million of Robinhood Shares Tied to FTX Founder
The US Department of Justice (DOJ) is in the process of seizing Robinhood shares, worth about USD 465 million that are tied to former FTX CEO Sam Bankman-Fried (SBF). "We believe that these assets are not the property of the bankruptcy estate or that they fall within the exceptions... of the bankruptcy code," a DOJ attorney told the judge looking into the FTX bankruptcy case.
Robinhood Shares Disputed by the New FTX Management
The US government is in the process of seizing 56 million shares
of Robinhood Markets Inc., worth about USD 465 million that are tied to the
disgraced FTX founder Sam Bankman-Fried (SBF), said Seth Shapiro, an attorney
with the US Department of Justice (DOJ), at an FTX bankruptcy court hearing in
Delaware on Wednesday.
Shapiro told Judge John Dorsey, who is in charge of the FTX
bankruptcy case:
"We believe that these assets are not the property of the
bankruptcy estate or that they fall within the exceptions... of the bankruptcy
code."
According to Robinhood’s filing with the Securities and Exchange
Commission (SEC) in May last year, Emergent Fidelity Technologies took a
7.6% stake in Robinhood, and Bankman-Fried was its sole director and
majority owner.
Following the FTX bankruptcy filing, the ownership of the
Robinhood shares is disputed by the new FTX management. Bankman-Fried, an
individual FTX creditor, and crypto lender Blockfi also filed
for bankruptcy in November last year.
Multiple Claimants to Robinhood Shares
Multiple parties have laid claims to the Robinhood shares. The
new FTX management has filed a motion with the Delaware bankruptcy court to
keep the assets frozen until the court "can resolve the issues in a manner
that is fair to all creditors of the debtors."
FTX lawyer James Bromley said during Wednesday’s hearing,
"The question as to the ownership of the Robinhood shares was an open
question before the seizure took place." He added:
"We certainly believe we have rights concerning those
assets... We are in alignment at this time with the US government and law
enforcement officials in taking these steps."
Bromley said the Robinhood shares to be seized by federal
prosecutors are from accounts that are not currently under the direct control
of the bankrupt FTX.
The DOJ and multiple US regulators, including the SEC,
have charged Bankman-Fried
with multiple counts of fraud. However, the former FTX CEO has pleaded
not guilty to all charges.
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FTX and Sam Bankman-Fried? Please post your comments.
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