Federal Authorities Seize Contested FTX Assets, Including Over $460M In Robinhood Shares

Toward the end of last year, several parties began to fight over shares in Robinhood belonging to Sam Bankman-Fried. Those looking to gain ownership included Bankman-Fried, BlockFi, an FTX creditor, and FTX itself. However, US prosecutors are looking to seize the shares, claiming they are not the property of a bankruptcy estate.

The shares: Bankman-Fried originally purchased the 7.6% stake, or 56 million shares, in investment app Robinhood for $648 million, but the price has since dropped to around $460 million. Despite the decrease in value, it is one of the most valuable assets remaining, making it highly sought after.

Who wants them: There have been multiple claims, with the first being from Bankman-Fried, who believes he is entitled to the shares. On the other hand, FTX wants to gain as much as it can to deal with investor funds that were caught up in Bankman-Fried’s fraud.

There has also been movement from BlockFi, which claimed Alameda Research promised to secure $1 billion in loans that included the stake. Lastly, a creditor, Yonatan Ben Shimon, has laid claim to the shares.

US prosecutors have their own plans: US attorney Seth Shapiro told US Bankruptcy Judge John Dorsey, who is overseeing FTX’s bankruptcy, that the Department of Justice does not believe the shares of Robinhood are part of the bankruptcy estate. Instead, Shapiro thinks the competing claims can be settled during a forfeiture proceeding.

• The shares were listed under Emergent Fidelity Technologies, of which Bankman-Fried owned 90%.
• The other 10% of Emergent belonged to Gary Wang, a business partner that pleaded guilty to fraud charges associated with FTX. He is now cooperating with prosecutors.

However, the Robinhood stake is not the only asset being seized. Multiple assets tied to the fallen crypto exchange are in the process of being seized or have been seized from numerous banks, which include Silvergate, a lender tied to the company.

Bahamian regulators also seized assets: The US government is not the only one on the move as the case against Bankman-Fried builds. The Bahamian Securities Commission announced the seizure of $3.5 billion in digital assets belonging to the Bahamas-based entity of the company, FTX Digital Markets.

• The regulator said that the intent of the seizure was for “safekeeping,” and they plan to return the tokens to their owners when allowed.
• The assets were seized based on information provided by Bankman-Fried.

According to the Bahamian Securities Commission, there was a risk of “imminent dissipation” of the assets, in part due to concerns including cyberattacks against the exchange.