Struggling cryptocurrency exchange, FTX has sought the assistance of a United States bankruptcy judge to prevent cryptocurrency lending firm BlockFi from claiming around $450 million in Robinhood stock bought by its former CEO Sam Bankman-Fried. On Nov. 28, BlockFi filed a lawsuit seeking Bankman-Fried’s holding company, Emergent Fidelity Technologies, to surrender 56 million shares of Robinhood Markets. The shares were reportedly offered as collateral for BlockFi’s loans to crypto trading firm Alameda.
Research shows both FTX and Alameda filed for bankruptcy before paying off BlockFi loans.
FTX argued in a US bankruptcy court filing that the law protects the company from collection efforts.
FTX said the shares are owned by Alameda Research and insisted the disputed FTX companies must hold the shares while investigations into other ownership claims continue. In addition to BlockFi, Bankman-Fried and FTX creditor Yonathan Ben Shimon are claiming the shares. If the court decides to deny the motion to keep the shares, FTX also proposed an alternative approach, which is to extend the “automatic suspension” of the assets. According to FTX, this will “ensure that all creditors, including BlockFi and others, can participate in an orderly claim process”.
After Bankman-Fried claimed he had only $100,000 left in his bank, he was recently released from prison on the stringent condition of $250 million bail. In California. The crypto community was stunned at how Bankman-Fried met the seemingly insurmountable requirement after pretending to be short of cash. Some even accused the former FTX CEO of using stolen funds from customers to continue getting out of jail. Others question the fairness of Bankman-Fried being able to vacation in a luxury home.