Former CEO of FTX, the now-bankrupt cryptocurrency exchange and hedge fund, filed a request to keep his shares of trading platform Robinhood, in order to pay legal fees. The U.S. Department of Justice (DOJ) has now seized the shares, valued at roughly $465 million, as the stake wasn’t part of the FTX bankruptcy estate.
Information from SBF trial reveal disgraced tycoon appealed to use his $465 million Robinhood shares.
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Sam Bankman-Fried, or SBF, has pleaded not guilty to fraud charges which followed the implosion of FTX in November 2022, when the cryptocurrency exchange filed for bankruptcy protection in the U.S. Bankman-Fried promptly fled to the Bahamas, where FTX’s Bahamas-based affiliate had an overlapping management team. He was arrested in December, extradited to the U.S. and released under bond.
Prior to its downfall, FTX Exchange was the world’s third largest centralized cryptocurrency exchange, specializing in most commonly traded cryptocurrencies, futures, leveraged tokens, options, MOVE contracts, and spot markets.
According to the Chapter 11 bankruptcy protection filing, FTX, once valued at $32 billion, has $8 billion in liabilities and owes as many as 1 million creditors. FTX’s legal team, Alvarez & Marsal, is in the process of reorganizing the company’s assets, and is in contact with the Securities and Exchange Commission, the DOJ, and the Commodity Futures Trading Commission. FTX’s new CEO, John J. Ray III, has a lot to answer for on behalf of his predecessor, who resigned as soon as the company filed for bankruptcy.
SBF was indicted by the U.S. District Court in Manhattan on eight counts, which include securities fraud and money laundering. With a trial date set on October 2, 2023, he was released from custody on a $250 million bond, the largest in history.
To help pay for his legal defence, Bankman-Fried appealed to maintain control over his 56 million shares of Robinhood, a brokerage app with over 14 million active users and $64 billion in assets. Court filing states SBF went as far as to say he needs the shares more than FTX customers awaiting reparations, since they “face only the possibility of economic loss”, whereas the consequences for Bankman-Fried are “irreparable”.
Regardless, SBF was denied his $465 million. The Robinhood shares in question are connected to his trading firm Alameda Research, to which Bankman-Fried issued a loan. The government also seized assets in bank accounts connected to a unit of the Bahamas-based FTX. Separate court filings reveal $93 million held by FTX at Silvergate Capital Corp., another crypto-focused bank accused of fraud.
Cryptocurrency experts and market analysts believe that the implosion of FTX will have a lasting ripple effect on the industry, regardless of the outcome of SBF’s trial.
