On Wednesday, a U.S. attorney told a judge in a virtual hearing, in Delaware that the Department of Justice is proceeding to seize Robinhood Markets shares that are tied to Sam Bankman-Fried (SBF). The former CEO of FTX, SBF has been charged with fraud, following the collapse of the crypto currency exchange in November, following which the company filed for bankruptcy. The Department of Justice (DOJ) thinks that these shares are not part of a bankruptcy estate.
According to a report in Reuters, U.S. attorney Seth Shapiro told John Dorsey, the U.S. Bankruptcy Judge who is overseeing the exchange’s bankruptcy that the Justice Department does not think that the 56 million shares of Robinhood belong to the estate. These shares are worth approximately $475 million. Robinhood stock traded at $8.18 down 2.21 percent on 5 January at 2.34 p.m. GMT.
The US attorney also said that a forfeiture procedure could be used to work out competing claims of Robinhood Markets stock. Those who have laid claims on the stock include
BlockFi
FTX
Antigua liquidators and
Sam Bankman-Fried.
According to an affidavit that was filed in December, in a court in Antigua, SBF bought about 7.42 percent of the stock-trading app stock through Emergent Fidelity Technologies Ltd. He used funds borrowed from Alameda Research to buy the stocks.
As per the filing, SBF claimed that he owned 90 percent of Emergent Fidelity Technologies Ltd, while former chief technology officer Gary Wang owned 10 percent.
Although Sam Bankman-Fried recently put forth a “not guilty” plea, on Tuesday to the various charges brought forth against him including wire fraud and money laundering, the former FTX executive Wang pleaded guilty to the charges laid on him and is cooperating with the authorities.
Crypto firm BlockFi is suing Emergent Technologies Ltd, in order to seize its Robinhood stock. The stock trading app stock had been pledged by Alameda Research as collateral on a loan made by BlockFi. Alameda Research filed for bankruptcy together with FTX, two days after it pledged Robinhood stock.
Neither Robinhood Markets nor BlockFi responded when asked for comment.
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FTX and Alameda File Request to Freeze $450 Million in Robinhood Stock in New York Court
