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Sam Bankman-Fried might lose his Robinhood shares to repay FTX debtors

Sam Bankman-Fried might lose his Robinhood shares to repay FTX debtors

TL;DR Breakdown

  • SBF has requested the court to debtors from accessing his shares in Robinhood.
  • Sam Bankman-Fried had agreed to provide a loan of $600 million utilizing the Robinhood shares as collateral in the event of an emergency.

In the most recent development, Sam Bankman-Fried (SBF), ex-CEO of defunct crypto exchange FTX, is petitioning the court to stop debtors from gaining access to his holdings in Robinhood. According to U.S. prosecutors’ reportage, these shares are worth an astounding $450 million.

In December 2022, the U.S. filed criminal charges against SBF following his apprehension by the Royal Bahamas Police Force, leading to him to being placed under house arrest. Unfortunately for many investors, this was only weeks after his crypto exchange had crashed and caused massive losses for multiple people across the globe.

The Department of Justice is poised to confiscate SBF’s Robinhood shares

Liquidators appointed by the court have taken over FTX Exchange and Alameda Research. However, these liquidators search for assets available to pay off FTX debtors.

At the initial court session, a U.S. Department of Justice prosecutor announced their strategy to take over SBF’s stock valued at $450 million. Meanwhile, the upcoming hearing will reveal what actions the Department of Justice took concerning Robinhood shares.

Sam Bankman-Fried filed a motion to the United States Bankruptcy Court in Delaware, challenging attempts by creditors to seize control of his Robinhood shares. According to the court filing, he asserts that these assets have no affiliation with FTX or other related firms.

In a legal filing on Thursday, the lawyers for SBF argued that their client needs money to cover his costs associated with legal representation.

Sam Bankman-Fried’s history with Robinhood Shares

Consequently, many companies exposed to the now-defunct exchange face a domino effect of its collapse. Genesis Trading is among these casualties, as well as BlockFi—the crypto lending firm which has filed for bankruptcy and is seeking reparations from Robinhood shares.

According to BlockFi, Sam Bankman-Fried had agreed to provide a loan of $600 million utilizing the Robinhood shares as collateral in the event of an emergency. The ex-CEO then signed agreements with BlockFi for a bailout amounting to $240 million come July 2022. As such, when disaster struck, and bankruptcy ensued – it was revealed that BlockFi had been significantly exposed via its ties with FTX priorly.

Before BlockFi’s bankruptcy, customers of FTX initiated a class action lawsuit against Sam Bankman-Fried and his exchange. In the suit, they argued their entitlement to all remaining assets belonging to FTX. A class action is when an individual takes legal steps on behalf of a group whose members are not necessarily in court.

The crypto exchange FTX is facing a flurry of legal action after they revealed that more than one million creditors have filed for bankruptcy. Many renowned celebrities, including Tom Brady, were hit hard by the financial losses reportedly tied to their investments in FTX. Sam Bankman-Fried and his company are also under investigation by several law enforcement and regulatory agencies.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Damilola Lawrence

Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space.

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