FTX's Latest Filing Asks Judge for Help, Find Out Why

According to a filing on Dec. 22, 2022 by FTX, the crypto exchange looked for the help from U.S. bankruptcy court in between a battle over ownership of around $450 Million worth of stock in Robinhood Markets (HOOD).

FTX Filing

In the preliminary statement of the filing, “approximately 56 Million shares of Robinhood Markets, Inc.’s (“Robinhood”) Class A common stock (the “Robinhood Shares” or “Shares”) are currently frozen in a brokerage account at ED&F Man Capital Markets Inc. (“EDFM”) in New York City. Alameda held other assets at EDFM for which there is no dispute as to ownership.”

However “unlike other FTX assets at EDFM, the Robinhood Shares were nominally held, on the Petition Date, in street name for an affiliated nondebtor company organized in Antigua and Barbuda named Emergent Fidelity Technologies Ltd. (“Emergent”). Emergent is a special-purpose holding company that appears to have no other business, and is 90% owned by Samuel Bankman-Fried, former CEO of FTX Trading and former ultimate controlling person of FTX Trading and Alameda.”

Additionally, three parties have tried to get control of those shares that are BlockFi (a lender that FTX had helped prop up earlier this year), Yonathan Ben Shimon (an FTX creditor appointed as a receiver in Antigua and granted permission to sell the shares under supervision of a court there) and Sam Bankman-Fried himself (who has legal bills).

The FTX’ ongoing investigation establishes that “it have at least a “colorable” claim to ownership of the Robinhood Shares, such that the automatic stay under section 362(a) of the Bankruptcy Code should be enforced and the Shares should remain frozen at EDFM by order of this Court pending resolution of competing claims by the diverse stakeholders of the FTX.”

“Meanwhile, in Antigua, a creditor of FTX Trading, Mr. Ben Shimon, has obtained a freezing injunction from an Antiguan court with respect to the assets of Emergent, including the Robinhood Shares, following the appointment of receivers for Emergent and the Shares,” FTX further added.

Later, “on December 11, 2022, immediately prior to SBF arrest, he surfaced and petitioned the Antiguan court to displace the receivers so that he can regain control of Emergent and the Robinhood Shares. Mr. Bankman-Fried’s application in the Antiguan proceedings remains pending.”

“While the full evidentiary record, once completely developed, will show the Robinhood Shares are conclusively estate property, this Court need not make that determination now in order to enforce the stay with respect to the Robinhood Shares,” FTX said.

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