The FTX cryptocurrency exchange is urging the court to freeze $450 million worth of Robinhood stock. The exchange made a filing on Thursday seeking the intervention of the US bankruptcy court over the ownership of the Robinhood stock. Three other parties are contesting the ownership of the stock.
FTX and Bankman-Fried fight over ownership of Robinhood stock
The matter involves around 56 million shares of the Robinhood social trading platform. These shares are valued at more than $450 million. The shares are currently under the ownership of Emergent Fidelity Technologies Ltd. The latter is an entity incorporated in Antigua and Barbuda. 90% of the ownership of Emergent is controlled by the founder of FTX, Sam Bankman-Fried.
The filing notes that three parties seek control of the 56 million shares. These parties include BlockFi, Bankman-Fried, and Yonathan Ben Shimon, an FTX creditor authorized to sell the shares by a court in Antigua.
The FTX bankruptcy team has already urged the company currently in the custody of the shares, ED&F Man Capital Markets, to freeze the shares. The exchange made this request around the time that the bankruptcy protection was filed, which was on November 11.
According to FTX, Emergent, which currently owns the shares, has nominal control of the stock and, therefore, cannot have total control over the ownership. The FTX bankruptcy estate notes that these shares belong to the crypto exchange. FTX adds, “Emergent is a special-purpose holding company that appears to have no other business.”
FTX also argues that the judge in charge of the bankruptcy proceedings should order that the shares remain frozen as FTX looks for ways to repay all company creditors. In its bankruptcy filing, FTX revealed that it had more than one million creditors.
The filing further reads that “the fact that multiple prepetition creditors of different debtors and Mr. Bankman-Fried are all seeking to obtain possession of the Robinhood shares demonstrates that the asset should be frozen until this court can resolve the issues in a manner that is fair to all creditors of the debtors.”
Bankman-Fried released on bail
In the filing, FTX said that Bankman-Fried was looking to acquire control over these shares to cover his legal expenses. Bankman-Fried’s legal bill is already high, given that the FTX CEO was mandated to pay a $250 million bail in a US federal court.
Before his arrest in the Bahamas, Bankman-Fried had said that he had only $100,000 left, which is quite a decline, given that the FTX exchange had a valuation of around $32 billion. The recent bail settlement was made through equity on his parents’ home and the signatures of two other close associates. The FTX founder is expected to appear at his next hearing on January 3, where he will take a plea and be arraigned. The bail requirement is that Bankman-Fried remains on house arrest.
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