Sam Bankman Fried, disgraced founder and CEO of FTX is fighting with FTX borrowers over hundreds of millions in seized Robinhood shares.
Court documents reveal that Bankman-Fried’s legal team says the shares are needed to fund the ex-billionaire’s defense while FTX debtors, such as crypto lender BlockFi, have filed a motion staking a claim to them as a part of FTX’s bankruptcy proceedings.
The 56 million shares were purchased by Bankman-Fried May 2022. They are currently being taken by the U.S. Department of Justice, (DOJ) and are estimated to be worth more than $460 million as of this writing.
After being accused of defrauding investors, Bankman-Fried faces 115 years imprisonment. FTX filed for bankruptcy after its native asset fell and was forced to stop customer funds.
The former chief executive’s attorneys argue that the shares were bought through his company Emergent, which is not implicated in the insolvency of FTX, and thus they should not be part of the bankruptcy proceedings.
“The FTX debtors seek to disregard the separate existence of a corporation that is not a party to this action and encumber hundreds of millions of dollars worth of assets to which they have no legal claim. The remedy they seek is extraordinary and inappropriate…
The balance in equities is in favor of refusing the extension or enforcement of the stay. Mr. Bankman Fried will not be able to access the property from Emergent as he is currently under criminal liability. Mr. Bankman-Fried requires some of these funds to pay for his criminal defense.”
Bankman-Fried’s lawyers also argue the debtors have failed to meet the standard that they’d be “irreparably injured” if they don’t receive the shares.
“The FTX debtors have failed to show that they will be irreparably injured by denial of relief because they argue only that denial of the stay will result in economic loss.”
MarketWatch shows that Robinhood shares are currently trading at $8.24 per share as of this writing.
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