Jan 4 (Portal) – US prosecutors are in the process of seizing shares in Robinhood Markets Inc (HOOD.O), linked to Sam Bankman-Fried, who has been charged with fraud in the collapse of cryptocurrency exchange FTX, a US investigator has said Advocate a judge on Wednesday.
The Justice Department did not believe the 56 million shares of Robinhood worth about $465 million were owned by a bankruptcy estate, US Attorney Seth Shapiro told US Bankruptcy Judge John Dorsey, who is overseeing the FTX bankruptcy.
Shapiro said competing claims to shares in the stock-trading app could be worked out in a forfeiture. Bankrupt crypto firm BlockFi, FTX and liquidators in Antigua have all laid claim to the Robinhood shares, along with Bankman-Fried.
Prosecutors have accused Bankman-Fried of engaging in a years-long “scam of epic proportions” that may have cost investors, customers and lenders billions of dollars by using customer deposits to support his hedge fund Alameda Research.
Bankman-Fried pleaded not guilty to charges of wire fraud and conspiracy. He has acknowledged risk management failures at FTX but said he does not believe he is criminally responsible.
According to an affidavit he filed in an Antigua court in December, Bankman-Fried purchased approximately 7.42% of Robinhood’s stock through Emergent Fidelity Technologies Ltd.
Bankman-Fried said he owns 90% of Emergent and Gary Wang, another former FTX executive, owns 10%. Wang has pleaded guilty to the fraud charges related to the collapse of FTX and is cooperating with prosecutors.
Shapiro also said prosecutors seized US bank accounts linked to FTX’s Bahamas-based business, known as FTX Digital Markets. Court records show that accounts at Silvergate Bank and Farmington State Bank, which operates as Moonstone Bank, held approximately $143 million
James Bromley, an attorney for FTX, told Dorsey that none of the assets to be seized are currently under the direct control of any of the FTX Chapter 11 companies. He said the Robinhood shares are the subject of litigation and that it is an “open issue.” about who they belong to.
Robinhood stock, which closed at $8.36 per share on Wednesday, is also being claimed by BlockFi Inc, another bankrupt crypto firm, as well as liquidators from Emergent, which is in bankruptcy proceedings in Antigua, where it is incorporated.
BlockFi is suing Emergent to seize Robinhood stock pledged by Alameda as collateral to guarantee repayment of a loan made by BlockFi. Two days after the pledging, Alameda filed for bankruptcy along with FTX.
BlockFi and Robinhood did not immediately respond to a request for comment.
reporting by Tom Hals in Wilmington, Del., and Dietrich Knauth in New York; Edited by Sandra Maler and Matthew Lewis
Our standards: The Trust Principles.
Tom Hals