The U.S. Department of Justice (DOJ) on Monday seized $465 million in shares of the stock-trading app Robinhood that are partially owned by disgraced former FTX CEO Sam Bankman-Fried, or SBF, who wanted access to the stock to help pay his legal fees.
- DOJ seized about $465 million in Robinhood shares from Bankman-Fried, saying it didn’t believe the stake was part of the FTX bankruptcy estate.
- U.S. Attorney Seth Shapiro said competing claims to shares of the stock-trading app can be resolved through forfeiture proceedings.
- Other assets related to the failed centralized cryptocurrency exchange FTX have been seized via separate court filings.
Several Claims to Assets
According to U.S. Attorney Seth Shapiro, DOJ didn't believe the 56 million shares of Robinhood, worth about $465 million, were the property of FTX's bankruptcy estate. Shapiro said competing claims to shares of the stock-trading app can be resolved through forfeiture proceedings. In addition to Bankman-Fried, several banks and crypto firms have laid claim to the Robinhood stock, including BlockFi, a now-bankrupt crypto lender; FTX; and liquidators in Antigua.
Additional Assets Seized
A lawyer leading the main FTX insolvency proceeding in the U.S. said the government is also seizing assets in bank accounts that are part of a bankruptcy case involving a unit of the FTX empire in the Bahamas.
Separately, court filings on Jan. 4 showed that an FTX arm held $93 million at Silvergate Capital Corp., a crypto-focused California bank that was ordered seized last month by a New York federal magistrate.
The Bottom Line
Customers and creditors are sifting through the remains of FTX's crypto empire in an attempt to retrieve some funds after the company filed for bankruptcy. BlockFi alleges that Bankman-Fried used the Robinhood stake as collateral for a loan to his trading firm Alameda Research.
Various creditors of FTX have filed court cases to try to gain control of the assets. A court hearing eventually will decide on the ownership of shares and assets seized from bank accounts tied to FTX and its former executives.