Bankman-Fried wants $450-million Robinhood stake for legal bills
Sam Bankman-Fried is trying to persuade a U.S. court that he should be able to access Robinhood shares worth around $450 million to help pay for his legal fees.
Lawyers for the former chief executive of the bankrupt exchange FTX argued in a Delaware court filing on Thursday that the 56.3 million Robinhood shares should be returned to Bankman-Fried because the company that owns them, Emergent Fidelity Technologies, is not part of the bankruptcy estate.
Bankman-Fried owns 90% of Emergent. He and former FTX chief technology officer Gary Wang allegedly borrowed $546 million from Alameda Research to buy the Robinhood shares, according to court filings. Robinhood’s shares closed Thursday at $8.11, giving the stake a value of $456 million.
“Mr. Bankman-Fried has not been found criminally or civilly liable for fraud, and it is improper for the FTX Debtors to ask the Court to simply assume that everything Mr. Bankman-Fried ever touched is presumptively fraudulent,” his lawyers said in the filing. They added that Bankman-Fried’s need to pay his legal bills is greater than the “economic loss” that FTX faces, citing several legal precedents.
Bankman-Fried, whose FTX tumbled into a chaotic bankruptcy in November, pleaded not guilty to eight charges earlier this week, including wire fraud and campaign finance violations. He is set to face trial in October.
The Department of Justice on Wednesday said it was in the process of seizing the Robinhood shares as part of the fraud case against Bankman-Fried. Because the U.S. government has moved to seize the shares, the initial legal fight over who should own them would likely take place in federal court in New York, where Bankman-Fried is facing the criminal and civil fraud charges.
FTX founder Sam Bankman-Fried pleaded not guilty to criminal charges of fraud in federal court Tuesday. His trial is scheduled for October.
Aside from FTX, which is seeking control of the shares to cover losses, interested parties in Bankman-Fried’s Robinhood stake include BlockFi, a crypto lender to which Bankman-Fried had pledged his Robinhood shares as collateral for loans.
BlockFi on Thursday filed a request similar to Bankman-Fried’s to support its own case for gaining access to the shares, alongside a filing by the joint provisional liquidators for Emergent in Antigua, where the company is registered. A court hearing will be held to determine who has the greater claim.
Bloomberg writers Steven Church and Jeremy Hill contributed to this report.
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