Sam Bankman-Fried, BlockFi, and other creditors try to claim ownership over the 56 million HOOD stock. FTX urges the court to freeze the assets.
The Robinhood (HOOD) price may further plummet as multiple creditors, including Sam Bankman-Fried, and the bankrupt crypto exchange BlockFi, claim ownership of the stocks.
Sam Bankman-Fried bought these 56 million stocks that granted him a 7.6% stake in Robinhood earlier this year. HOOD is trading more than 90% down from its all-time highs.
Earlier this month, Citi Group analysts predicted that Robinhood, the stocks and crypto trading platform, could be the latest casualty of the FTX collapse.
Sam Bankman-Fried to pay Legal Expenses by Liquidating HOOD
FTX’s filing to the US Bankruptcy Court for the District of Delaware mentions that three stakeholders have filed court actions to gain control of HOOD stocks, including Sam Bankman-Fried himself.
The stocks’ custody lies with a special purpose holding company, Emergent Fidelity Technologies Ltd. According to the filing, Sam Bankman-Fried owns a 90% stake in the holding company.
The filing claims that Sam Bankman-Fried has repeatedly sought a payment source for legal expenses. Will he liquidate his HOOD holdings to pay legal expenses?
FTX Files Motion to Freeze the Stocks
Along with Sam Bankman-Fried, the bankrupt crypto exchange BlockFi, and Yonathan Ben Shimon (a prepetition creditor of FTX Trading) claim the ownership of HOOD stocks.
BlockFi, affected by the FTX contagion, filed for Chapter 11 bankruptcy last month. After the bankruptcy filing, to reclaim some capital for the proceedings, BlockFi sued Sam Bankman-Fried for the HOOD shares.
Before filing for bankruptcy, Alameda Research, under Caroline Ellison, pledged over $1 billion worth of additional assets to secure Alameda’s outstanding loan obligations to BlockFi. The HOOD stocks were part of the pledge, according to the FTX’s recent filing.
Due to the claims from multiple creditors, FTX, under the leadership of John J. Ray III, filed a motion to freeze the HOOD stocks until the issue is resolved. The filing reads, “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.”
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BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.