The lawyers of disgraced FTX co-founder Sam Bankman-Fried have filed an objection to protect their client’s Robinhood shares from FTX bankruptcy estate.
Update Jan 9. 2022, (14:50UTC): The US Department of Justice has confirmed that it has seized 55 million Robinhood (HOOD) shares, while also seizing an additional $20 million in US currency. The DoJ has also notified the court of the seizure related to the criminal case against FTX and its former executives. The total amount seized at the time of publication equates to $478 million.
Sam Bankman-Fried’s lawyers argued his Robinhood shares are controlled by Emergent Fidelity Technologies, which is not part of the estate.
Objection Can Only Be Overturned by Proving Fraud, Lawyers Argue
According to Fortune, U.S. prosecutors and bankrupt lender BlockFi have tried to lay claim to the stock, worth roughly $450 million. Bankman-Fried allegedly put up the shares as collateral for a BlockFi loan to FTX affiliate Alameda before Alameda declared bankruptcy.
Bankman-Fried, aka SBF, owns the Robinhood shares through his 90% stake in Emergent, which disclosed the equity acquisition in a distinct filing with the U.S. Securities and Exchange Commission (SEC). Bankman-Fried reportedly borrowed money from Alameda to fund the stock acquisition.
According to FTX lawyers, FTX debtors can only seize the shares by proving that Alameda fraudulently gave them to Emergent.
FTX filed for bankruptcy on Nov. 11, 2022, after mass withdrawals and a sharp dip in the value of its native FTT token caused its liquidity crisis.
Bankman-Fried pleaded not guilty to eight criminal charges, including conspiracy to commit wire fraud and money laundering. He is currently out on $250 million bail secured by his parents’ California home and two unnamed guarantors.
On Jan. 3, 2022, SBF’s legal counsel successfully argued to maintain the anonymity of the suretors after Bankman-Fried’s parents allegedly received threats and harassment.
In addition to the criminal charges, SBF faces civil investigations by the SEC for allegedly defrauding FTX equity investors.
Crypto Twitter Irate at SBF’s Robinhood Attempts
The FTX founder, whose paper fortune rapidly evaporated after FTX filed for bankruptcy on Nov. 11, 2022, reportedly needs the shares to pay his legal fees. According to FT Alphaville, Bankman-Fried unsuccessfully tried to sell his Robinhood shares to save FTX before the bankruptcy filing.
His lawyers argued through case law that a defendant’s “financial inability” to plead their case has “serious consequences,” while FTX Debtors, on the other hand, only face a potential economic loss.
Needless to say, crypto Twitter did not respond kindly to the filing.
NFT artist Ryder Ripps called the filing “typical rich baby behavior,” while others suggested that SBF’s attempt to retain stolen money to defend himself against charges of stealing money is absurd.
Pseudonymous Bitcoin trader bitcointazz implied SBF didn’t need $400 million-plus to defend himself.
A judge has set Oct. 2, 2023, as Bankman-Fried’s trial date.
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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.