Will This Affidavit by SBF Bring Another Storm for him?

A legal document or affidavit by Sam Bankman-Fried (SBF) brought another twist as the FTX’s former Founder borrowed around $546 Million from Alameda, to fund the purchase of Robinhood shares. The affidavit by SBF mentioned the purchase of Robinhood shares, which were later used as collateral for Alameda (his trading firm) to secure a loan from BlockFi.

BlockFi, a digital asset lender, was founded in 2017 and was once valued at $3 Billion. In July 2022, it announced that FTX made a deal with an option to buy BlockFi for up to $240 Million. That deal included a $400 Million credit facility for BlockFi. But after the shocking announcement of FTX’s bankruptcy filing in November 2022, BlockFi halted its withdrawal. And later on Nov. 28, 2022, the digital asset lender filed for Chapter 11 bankruptcy protection, according to filings.

Although, the shares that SBF bought later were used as collateral for a loan that was taken by Alameda from BlockFi, one of the entities that are laying claim to the shares. It must be noted that an affidavit by SBF filed in the Antigua and Barbuda High Court on Dec. 12 — the same day when he got arrest — and made public on Dec. 27, revealed that he and FTX co-founder Zixiao “Gary” Wang took out the loans from FTX’s sister firm through four promissory notes between April and May.

SBF got the loan of around $316 Million while Mr. Wang got $35.1 Million on April 30, 2022. In the next month, SBF received two loans of around $175 Million and $19.4 Million on May 15, 2022. These loans were used to fund SBF’s Antiguan-based shell company, Emergent Fidelity Technologies Ltd., which acquired a 7.6% stake in brokerage firm Robinhood in May that is currently worth around $648 Millon.

However SBF mentioned that if the sum paid by his shell company for the shares was more than the stated $546 Million he has “not [sic] doubt that such additional sum was borrowed by Gary and I” to fund the acquisition of the Robinhood shares.

Now, here is a catch as this loan exposure may complicate the ongoing battle for more than 56 Million Robinhood shares, currently worth around $430 million. Furthermore, BlockFi is suing SBF’s Emergent for the Robinhood shares, which were allegedly pledged as collateral for BlockFi’s loans to Alameda on Nov. 9.

In the previous week, on Dec. 23, FTX asked a U.S. bankruptcy judge to prevent BlockFi from claiming the shares. Additionally, SBF and the Creditor of FTX, Yonathan Ben Shimon, are laying claim to the shares.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing