To pay for his acquisition of Robinhood shares, he borrowed more than $546 million from the exchange's subsidiary company Alameda Research.
Bankman-Fried utilized those shares as security for a loan obtained by Alameda from BlockFi (1), one of the parties asserting ownership of the shares. Bankman-Fried and FTX co-founder Zixiao "Gary" Wang obtained the loans from Alameda through four promissory notes between April and May 2022, according to an affidavit (2) he and Wang submitted to the Antigua and Barbuda High Court on December 12, the day of their arrest and made public on December 27.
On April 30, Bankman-Fried and Wang received loans totaling around $316.6 million and $35.1 million, respectively. Afterward, two loans totaling around $175 million and $19.4 million were awarded on May 15 to Bankman-Fried. The loans were used to finance Bankman-fictitious Fried's Antiguan business, Emergent Fidelity Technologies Ltd., which paid $648 million for a 7.6% interest in brokerage firm Robinhood in May.
How will this impact SBF's case?
The discovery of the loans might exacerbate the existing legal battle over the more than 56 million Robinhood shares, which are now valued at about $430 million. BlockFi, a troubled cryptocurrency lender, is suing Bankman-Emergent Fried's for the allegedly stolen Robinhood shares. It was pledged on November 9 as security for loans BlockFi made to Alameda. On December 23, FTX intervened, requesting the help of a U.S. bankruptcy judge to stop BlockFi from claiming the shares. It claimed that Alameda held the shares and requested that FTX firms preserve their ownership of Robinhood while looking into alternative ownership claims.
The shares are also being sought by Bankman-Fried and FTX creditor Yonathan Ben Shimon. Previously, Bankman-Fried was identified as the recipient of a $1 billion personal loan from Alameda, according to FTX's Chapter 11 bankruptcy papers in the United States. According to the terms of her guilty agreement, former Alameda CEO Caroline Ellison stated on December 23, "Alameda was borrowing monies that FTX's clients had put onto the exchange."