Robinhood Shares in Contested Ownership Seized by Regulators from FTX
The US Justice Department (DoJ) confirmed taking custody of the $450 million Robinhood shares in disputed ownership between BlockFi and FTX creditors.
Contested Ownership in Robinhood Shares
The filing submitted to the Delaware bankruptcy court indicated that DoJ assumed custody of the shares whose ownership is contested by FTX creditors and crypto lending firm BlockFi. The January 4 filing by SEC restated that FTX co-founders Garry Wang and Sam Bankman-Fried obtained loans advanced by Alameda Research in four tranches from the users’ funds to acquire the shares in May 2022.
The documents indicated the duo established Emergent Technologies as the investment vehicle to acquire the publicly traded shares currently valued at $546 million.
Seizure by DoJ Affects Robinhood Shares Attracting Multiple Claimants
FTX attorney James Bromley observed the motion filed by the DoJ admitted uncertainty in determining the rightful owner of the contested shares. The filing highlighted that the shares attracted several claimants, including Bankman-Fried, to settle legal fees incurred during the bankruptcy proceedings, individual FTX creditors and BlockFi.
Bromley observed that BlockFi claimed the shares, citing the pledge by Banman-Fried in case he defaulted on the loan. He noted that FTX dismissed BlockFi claims and instead sought the pledged shares.
Explaining the seizure, FTX’s lawyer confirmed compliance with the directive issued by the Southern District Court of New York in a suit alleging criminal conduct of Bankman alongside Ellison and Wang.
Bromley attributed the seizure implemented by DoJ to the Robinhood stock cited in the ongoing proceedings involving FTX collapse, BlockFi chapter 11 filing and litigation initiated in Antigua and Barbuda.
Reservation of Rights to Seized Assets
Lawyer Bromley assured the reservation of FTX rights as debtors and challenged other parties to replicate the rights. He revealed that the seizure only involved Robinhood shares held in accounts beyond the FTX control.
Bromley lauded the DoJ submissions before the court, illustrating its intention to file the notice confirming the seized assets it was assuming custody from FTX. Bromley echoed submissions by the US attorney Seth Shapiro promising the notice would detail the assets in the government’s possession.
Shapiro expressed confidence in the proceedings’ pace with the subsequent hearing scheduled for January 20. In particular, the presiding judge allocated the entire day’s hours to the FTX proceedings and Robinhood shares.
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