The filings submitted by the defunct FTX exchange challenged BlockFi’s claim on the Robinhood Markets shares estimated at $450 million. The urgent motion filed before the US bankruptcy court sought to prevent crypto lender BlockFi from laying claim on the 56 million shares initially acquired by embattled Bankman-Fried.
FTX submissions before the Delaware-based court on December 22 that the US bankruptcy laws prohibit end-run attempts by debt collectors such as those deployed by BlockFi to claim $450 million worth of shares.
FTX alleges the lawsuit by BlockFi on November 28 demanded that Emergent Fidelity Technologies hand over the Robinhood Markets stocks. The suit indicates that Bankman-Fried used the stocks as collateral to secure loans advanced by BlockFi to Alameda Research, identified as an FTX affiliate.
FTX Case Motion Against BlockFi
The documents filed by FTX on Thursday indicate that while the BlockFi loans remained outstanding at the time, FTX and Alameda sought chapter 11 protection. The counter-response to the BlockFi suit suggests that the bankruptcy law explicitly shields FTX from invasive debt collection.
Also read:FTX submitted that the 56 million shares are under Alameda Research ownership, a reason to retain control over the shares as investigations and additional claims to their ownership proceed.
The collapse crypto exchange attorney indicated that another creditor Yonathan Ben Shimon is claiming the stock. Shimon submitted before the Antigua-based court to avail the Robinhood shares to repay creditors. Besides the suit filed in Antigua, where FTX was incorporated, Bankman-Fried submitted to utilize the Robinhood shares as payment for his legal expenses.
FTX Counter Arguments to BlockFi’s Lawsuit
FTX pleads with the court to dismiss BlockFi’s request. Alternatively, FTX suggests the court consider extending the automatic stay to the 56 million assets. By doing so, FTX illustrates that a stay order will allow the participation of creditors claiming the assets guided by an orderly process.
FTX disclosed that the BlockFi suit mirrors an end-run attempt to navigate legal protections accorded by the bankrupt entities. FTX’s attorney argued that the crypto lender tailored the lawsuit by targeting Emergent Fidelity – a non-bankrupt entity.
FTX illustrated that Emergent Fidelity only holds the Robinhood shares on behalf of Alameda, which has ultimate ownership of the stock and is the debtor to BlockFi.
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