DOJ to seize $465M of Robinhood shares tied to FTX founder
A lawyer told a bankruptcy judge that the DOJ did not believe the shares were property of a bankruptcy estate
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U.S. prosecutors are in the process of seizing shares of Robinhood Markets tied to the founder of FTX.
Sam Bankman-Fried has been charged with fraud in the collapse of the FTX cryptocurrency exchange.
The situation involves 56 million shares of Robinhood, worth $465 million and who has claim to them.
The Department of Justice did not believe the shares were property of a bankruptcy estate, U.S. attorney Seth Shapiro told U.S. Bankruptcy Judge John Dorsey, who is overseeing the FTX bankruptcy.
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Robinhood logo on stock market display. (istock / iStock)
Bankrupt crypto firm BlockFi, FTX and liquidators in Antigua have all laid claim to the Robinhood stock, as well as Bankman-Fried.
Shapiro said that competing claims to shares of the stock-trading app could be worked out in a forfeiture proceeding.
Sam Bankman-Fried leaves Federal Court in New York City on Thursday, December 22, 2022. The former CEO of FTX and Alameda has been released on $250M bail. (Charles Guerin/Abaca for Fox News Digital / Fox News)
Bankman-Fried pleaded not guilty to counts of wire fraud and conspiracy.
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Bankman-Fried purchased about 7.42% of Robinhood's stock through Emergent Fidelity Technologies Ltd, using funds borrowed from Alameda Research, according to an affidavit he filed in December in an Antigua court.
Shapiro also said prosecutors had seized U.S. bank accounts affiliated with FTX's Bahamas-based business, known as FTX Digital Markets.
BlockFi logo is seen in this illustration, Nov. 28, 2022. (Reuters/Dado Ruvic/Illustration / Reuters Photos)
Court records show the accounts at Silvergate Bank and Farmington State Bank, which does business as Moonstone Bank, held about $143 million.
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James Bromley, an attorney for FTX, told Dorsey that none of the assets targeted for seizure are currently in the direct control of any of FTX entities in Chapter 11.
He said the Robinhood shares were subject to litigation and it was an "open question" about who owns them.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HOOD | ROBINHOOD MARKETS INC. | 37.62 | +0.08 | +0.21% |
Shares of Robinhood closed on Wednesday at $8.36 per share.
FOX Business has reached out to BlockFi for comment.
Robinhood responded saying "We have nothing to share here at this time."
Reuters contributed to this report.