Feds Move To Seize FTX’s Robinhood Shares As Sam Bankman-Fried Faces Fraud Charges
Federal authorities have seized or are in the process of seizing more than $400 million worth of Robinhood Markets shares tied to bankrupt cryptocurrency firm FTX, a Justice Department prosecutor said Wednesday, as part of an effort to gain possession of assets the company still holds after it allegedly blew through billions of dollars in customers’ money.
Prosecutor Seth Shapiro said at a hearing the government is taking control of the shares, while it is also seizing assets in bank accounts FTX held in the Bahamas, according to Fortune and several other news outlets.
A future hearing will determine what the government will do with the approximately 56 million shares, Shapiro said.
Bankman-Fried purchased the Robinhood shares–representing around 7.6% of the online brokerage firm–on May 2, according to a Securities and Exchange Commission filing.
BlockFi, a separate cryptocurrency company that went bankrupt in November, has claimed in its own bankruptcy proceedings that it is owed the Robinhood shares, since Bankman-Fried allegedly promised them as collateral in exchange for more than $600 million in loans to Alameda Research, FTX’s failed sister trading firm. FTX made an agreement to buy BlockFi for a price as high as $240 million in July, and when FTX began to collapse, BlockFi revealed it had “significant exposure” to the crypto exchange and later filed for bankruptcy.
FTX filed for bankruptcy on November 11, after the exchange faced solvency issues and concerns about improper ties between FTX and Alameda. It was later reported that the firm spent billions in customer money in a failed attempt to prop up Alameda, setting off a legal whirlwind for Bankman-Fried, who resigned as CEO of the Bahamas-based company after the filing. Bankman-Fried was charged with eight criminal counts last month—including wire fraud, money laundering and securities fraud—before police in the Bahamas arrested him on December 12 on behalf of U.S. authorities. He was extradited to the U.S. the next week before being released December 22 on a $250 million recognizance bond, which is only secured by his parents’ equity in a Stanford, California, home that was last assessed at under $1.8 million.
Forbes estimates Bankman-Fried’s net worth peaked at $26.5 billion, which was almost entirely tied up in FTX. His current net worth is unclear, but he repeatedly claimed before his arrest he had about $100,000 in his bank account.
Sam Bankman-Fried Released On $250 Million Bond—But He Only Put Up A Fraction Of That (Forbes)
Sam Bankman-Fried Charged With Eight Criminal Counts—Including Wire Fraud And Campaign Finance Violations (Forbes)
Sam Bankman-Fried Agrees To U.S. Extradition After Chaotic Day In Bahamas Court (Forbes)
Sam Bankman-Fried Pleads Not Guilty In FTX Fraud Case, Trial Set For October (Forbes)