Sam Bankman-Fried Fights To Keep Control of $450M In Robinhood Shares As Creditors Circle
FTX founder Sam Bankman-Fried is facing legal battles as he attempted to keep control of his 56 million shares in the consumer trading app Robinhood Markets Inc (NASDAQ:HOOD), currently worth around $450 million.
Bankman-Fried acquired them through his holding company Emergent Fidelity Technologies in May 2022, when they were valued at approximately $600 million.
In a court filing, Bankman-Fried's representatives cited the need for some of these funds to pay for his criminal defense, citing U.S. case law that holds that the financial inability to defend oneself may constitute "irreparable damage."
The filing also argued requests by debtors to access the funds should be denied because they "have failed to carry their heavy burden of demonstrating that they are entitled to this form of relief."
In December 2022, FTX's CEO John Ray III, who took over from Bankman-Fried, requested the court which oversaw the exchange's bankruptcy freeze Bankman-Fried's Robinhood shares.
In the court filing, FTX argued that because there were so many creditors seeking ownership of these shares, "the asset should be frozen until this Court can resolve the issues in a manner that is fair to all creditors of the Debtors."
Defunct crypto lender BlockFi, which filed for bankruptcy in November 2022, claimed the assets were pledged to it under the terms of an agreement made on Nov. 9.
The lender alleged Bankman-Fried's investment vehicle "defaulted on its obligations under the pledge agreement" and "failed to satisfy its obligations thereunder despite written notice of default and acceleration."
The court filing admitted this made the requests by the debtors "moot," but noted that Bankman-Fried was legally "compelled to reply" to the debtor's requests.