Sam Bankman-Fried, BlockFi, and an FTX Creditor Fight for Robinhood Stake

The crypto industry is experiencing tremendous hardship in the face of FTX’s collapse and tough economic times. It has seen various companies declare bankruptcy, including fellow crypto company BlockFi. People and companies are scrambling to stay afloat and salvage what they can, and in the chaos, Sam Bankman-Fried’s 7.6% stake in the investment app Robinhood has become contested property.

The history between FTX and BlockFi makes things complicated. Prior to the crypto exchange’s collapse, there was a deal in place with BlockFi, involving a $400 million revolving credit facility. While there were conditions attached, BlockFi was relying on the deal to operate as usual, and its falling through contributed to BlockFi’s eventual bankruptcy.

BlockFi reported “significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US.”

There are multiple parties laying claim to the Robinhood stake. The over 56 million shares are a valuable asset that many people want. Current FTX CEO John Ray III wants to regain investor funds swindled by Bankman-Fried, so he is arguing that the stake belongs to them.

Meanwhile, Sam Bankman-Fried says that he is entitled to the shares, which are listed under Emergent Fidelity Technologies, a company he registered in Antigua. However, two other creditors are also wrapped up in the battle — BlockFi and FTX creditor Yonatan Ben Shimon.

• BlockFi filed a lawsuit against Bankman-Fried that said Alameda Research promised to secure $1 billion in loans that included the stake.
• Ben Shimon obtained an injunction to freeze the assets of the holding company used to buy the shares.
• FTX is looking to freeze all activity in the shares until everything is settled legally.

According to FTX, “The debtors are conducting an investigation into the business affairs of the FTX group.” Moreover, at the time of the statement, the investigation indicated that “Robinhood shares are property of the debtors’ estates, held only nominally by Emergent.”

How much are the shares worth? Bankman-Fried bought the 7.6% stake for $648 million. However, the price has since dropped to around $8 per share, dropping the more than 56 million shares to around $447 million. Although the loss of $200 million is significant, it is one of the most valuable assets remaining on the fallen exchange’s balance sheet.

FTX is looking to get back money wherever it can. The funds given out by the exchange and its executives are all subject to scrutiny, with the company looking to pull back the cash given to politicians and charities. At least $73 million went to political donations, going to both democrats and republicans.

Many of the recipients have indicated that they will be returning funds donated by former executives, including the Senate Majority PAC. The exact funds include $2 million from the ex-head of engineering, Nishad Singh, and $1 million from Bankman-Fried.