- SBF and Gary Wang bought a 56.2 million share stake in Robinhood.
- Sam would be using this to fund the legal battle.
- Alameda, BlockFi and FTX debtors are trying to access the fund.
FTX was once the third-largest cryptocurrency exchange in the world, and some people were saying that Sam Bankman-Fried would be the industry’s future. But then, a chain of events followed that led FTX to file for chapter 11 bankruptcy on November 11, 2022. Sam is not facing legal trials where he had pleaded not guilty to all the charges. And now he had filed a court action asking that the block debtors from taking control of an approximately $450 million stake in Robinhood.
According to court filings submitted on Thursday, Sam’s lawyers had claimed that the shares in question do not belong to any of the FTX-related entities, which are now under bankruptcy proceedings. Moreover, Bankman needs this money to fund legal expenses.
Alameda Research and other firms in this bankruptcy case are now under the control of a court-applied liquidator. They are actively seeking any access they can get to any of the assets up for grabs to pay approx 1 million creditors of FTX. The list of options also includes the Robinhood shares in question.
Many entities are trying to gain access to the said funds, including the failed crypto lender BlockFi, FTX creditors, and the Department of Justice (DoJ).
The petition said that Sam Bankman-Fried and the former FTX CTO Gary Wang, who had pleaded guilty with Caroline Ellison, bought a 56.2 million share stake in Robinhood through a special purpose vehicle called Emergent Fidelity Technology. These borrowed the amount via promissory notes to purchase the shares from Alameda.
The petition filed by Sam Bankman-Fried further says:
“The FTX Debtors seek to disregard the separate existence of a corporation that is not a party to this action and encumber hundreds of millions of dollars’ worth of assets to which they have no legal claim.”
Sam has been relying heavily on his stakes in Robinhood to fund the expensive legal battle. Further, the petition argues that if the fund were to be withheld, it would be irreparable harm, as Sam and his team would not be able to bear the costs of an adequate criminal defense.
Sam Bankman-Fried is currently out on a $250,000 personal bond and living with his parents in California. During his second appearance in the court, as expected, Sam pleaded ‘Not Guilty’ for all eight charges, while Caroline Ellison and Gary Wang had pleaded ‘Guilty’ and could be working as prime witnesses in the case.
The court said that the trial could begin in October 2023, and this time should be enough for both parties to gather the evidence and dig deeper into this multi-million dollar deceit.
Experts say that there is a possibility that the matter could be settled out of the court of law, as often, during such white-collar crimes, a settlement deal is carried out between the defendant and the plaintiffs.
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
Source: https://www.thecoinrepublic.com/2023/01/07/leave-robinhood-shares-alone-sbf-to-ftx-debtors/