On Thursday night time, the legal professionals of disgraced crypto founder Sam Bankman-Fried filed an objection within the chapter proceedings of his crypto alternate, FTX, to retain 56 million shares of Robinhood, at the moment valued at round $450 million.
The shares of Robinhood have change into a serious level of competition within the Delaware chapter court docket case. Whereas Bankman-Fried owned that fairness, he borrowed lots of of tens of millions of {dollars} from FTX’s affiliated buying and selling agency, Alameda Analysis, to buy it by way of a separate entity known as Emergent Constancy Know-how, of which he owns 90%, together with FTX cofounder Gary Wang.
Completely different events have tried to grab the Robinhood shares, together with the FTX chapter property and the crypto lender BlockFi—Bankman-Fried’s Emergent had pledged the inventory as collateral for greater than $600 million in loans that BlockFi offered Alameda forward of its chapter. The U.S. Division of Justice can also be staking a declare: On Jan. 4, U.S. legal professional Seth Shapiro informed the decide overseeing the FTX chapter that prosecutors are within the technique of seizing the shares.
In Thursday’s objection, Bankman-Fried’s legal professionals argued that the company in charge of the Robinhood fairness shouldn’t be a celebration to the chapter proceedings, because it’s not owned by Alameda or another entity implicated within the chapter. Emergent had acquired the shares in a separate submitting with the Securities and Trade Fee.
The DOJ charged Bankman-Fried with eight counts of federal fraud in December associated to the collapse of FTX and Alameda. He pled not responsible, and a trial is about for October.
Of their objection, Bankman-Fried’s legal professionals wrote that the one means for FTX debtors to acquire the shares can be advancing a “fraudulent switch declare,” or that the shares have been transferred from Alameda to Emergent underneath suspicious circumstances.
As court docket proceedings proceed in each the chapter case and Bankman-Fried’s felony trial, jockeying for the lots of of tens of millions of {dollars}’ value of shares will proceed, particularly as the worth of different holdings—comparable to FTX’s proprietary FTT token—has evaporated.
Bankman-Fried’s legal professionals argued that he requires the Robinhood shares to pay for his felony protection. Bankman-Fried, whose value was as soon as valued at $26.5 billion, has said that he solely has $100,000 left in his checking account.
Citing case regulation, the legal professionals wrote {that a} “monetary lack of ability to defend oneself has severe penalties.”
The FTX debtors, Bankman-Fried’s legal professionals continued, solely face the potential of financial loss.
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