The investment in 56 million Robinhood Markets shares is valued at over $450 million.
The reason for the opposition
The troubled cryptocurrency exchange FTX requested (1) a bankruptcy judge in the U.S. to help prevent the crypto loan company BlockFi from seizing shares in Robinhood that its former CEO Sam Bankman-Fried had bought for almost $450 million. On November 28, BlockFi filed a lawsuit for 56 million shares of Robinhood Markets from Bankman-parent Fried's company, Emergent Fidelity Technologies. The equities reportedly served as security for loans made by BlockFi to cryptocurrency trading company Alameda Research.
Before paying out the BlockFi loans, FTX and Alameda both declared bankruptcy. In contrast, FTX contended in a document submitted to a U.S. bankruptcy court that the law shields the business from collection efforts. Insisting that the troubled FTX firms maintain the shares while inquiries into other ownership claims are underway, FTX claimed that Alameda Research is the rightful owner of the shares. In addition to BlockFi, Bankman-Fried and Yonathan Ben Shimon, a creditor of FTX, are also claiming ownership of the shares.
The Alternative FTX Seeks
FTX also recommended an alternate strategy: "prolong the automatic stay" of the assets if the court rejects the plea to maintain the shares. By doing this, according to FTX, "all creditors, including BlockFi and the others, may engage in an orderly claims procedure." Bankman-Fried was recently released after claiming to only have $100,000 in his bank after meeting the demanding $250 million bail terms (2). The parents of the former FTX CEO used the equity of their California home to finance the bond.
The crypto world was perplexed about how Bankman-Fried, who had claimed to have little money left, could fulfill the seemingly impossible criterion. Some people even claimed that the previous CEO of FTX utilized monies from stolen customers to avoid going to prison. Others dispute if Bankman-ability Fried's to spend the holidays in a mansion is fair.