Multiple news agencies reported on Saturday that the bankrupt cryptocurrency exchange FTX has requested a U.S. court for assistance in a dispute over ownership of approximately $450 million worth of Robinhood Markets stock.
Based on a court filing made by the Bahamas-based FTX, 56 million shares of Robinhood Markets are the focus of this conflict, and as of today, three separate parties have asserted ownership.
The attorneys for the failed crypto exchange sought the bankruptcy judge handling its insolvency case to suspend access to the shares pending confirmation of their genuine ownership.
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Although it is unclear if FTX owns them, attorneys believe the company likely does.
The shares were acquired by Emergent Fidelity Technologies, a firm majority-owned by former FTX CEO Sam Bankman-Fried, according to the filing.
FTX Vs. BlockFi Vs. Shimon
Another claimant is the bankrupt crypto lender BlockFi. BlockFi filed a lawsuit against Emergent last month to recover the shares.
Alameda Research was a cryptocurrency trading company co-founded by Bankman-Fried and Tara Mac Aulay in September 2017.
Before the collapse of FTX, former Alameda CEO Caroline Ellison pledged the shares to BlockFi, according to FTX’s legal counsel.
Yonathan Ben Shimon is the third party seeking possession of the Robinhood shares.
A court in Antigua has authorized Shimon, an FTX creditor who has been appointed as a receiver, to sell the company’s shares.
The filing stated:
“The fact that multiple prepetition creditors of different debtors and Mr. Bankman-Fried are all seeking to lay claim on the Robinhood Shares demonstrates that the asset should be frozen until this court can resolve the issues.”
Bankman-Fried Out On $250 Million Bail
This week, Bankman-Fried was extradited from the Bahamas, where he was detained for eight days, to face fraud and other criminal charges in the United States.
Thursday was his first court appearance in the U.S. He was released on a $250 million bail.
Ellison and Gary Wang (co-founder of FTX), top sidekicks of Bankman-Fried, pled guilty to federal fraud charges. The two were released on $250,000 bond.
In the U.S., parties owed money by insolvent enterprises are normally prohibited from attempting to confiscate assets to satisfy their claims.
Crypto total market cap at nearly $771 billion on the daily chart | Chart: TradingView.com
Robinhood Stock’s Major Role
Prior to the implosion of FTX, Robinhood’s stock played a key role.
They were pitched in a database as some of the crypto empire’s most valuable assets in response to rescue fundraising efforts.
The CEO of Robinhood, Vlad Tenev, disclosed earlier this month that he anticipates the company’s stake to be involved in bankruptcy procedures for the foreseeable future.
At the time of writing, Robinhood stock is trading at $7.88 per share.
There has been no announcement of a date for a hearing on FTX’s motion.