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FTX fallout: BlockFi sues SBF for his 7.6% shares in Robinhood, say reports

By Daniela Ešnerová


Updated

BlockFi logo
SBF’s HOOD stash is currently worth some $619m – Photo: ShutterStock

Newly-bankrupt crypto-lending platform BlockFi is suing Sam Bankman-Fried over collateral pledged to the lender two days before his firm FTX went bust.

BlockFi’s complaint against Bankman-Fried’s holding firm Emergent Fidelity Technologies is revealed in papers filed to the New Jersey bankruptcy court.

The collateral in question was identified as his stake in the Nasdaq-listed trading platform Robinhood (HOOD) by the Financial Times. 

The 7.6% stake in HOOD held by Bankman-Fried, known as ‘SBF’ in the crypto world, is currently worth some $619m based on HOOD stock price of $9.19.

BlockFi filed the suit against Emergent hours after seeking bankruptcy protection to restructure, settle its debts and recover assets for its clients. 

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US100

19,802.00 Price
+1.440% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 1.8

Gold

2,395.82 Price
-0.190% 1D Chg, %
Long position overnight fee -0.0196%
Short position overnight fee 0.0114%
Overnight fee time 21:00 (UTC)
Spread 0.30

BTC/USD

67,552.35 Price
-0.330% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

ETH/USD

3,448.29 Price
-1.560% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

Robinhood (HOOD) share price

FTX and BlockFi links

BlockFi’s filing for bankruptcy was far from unforseen. The lender halted withdrawals two weeks ago, citing exposure to the collapsed FTX. In June, FTX’s US arm, FTX US, agreed to provide BlockFi with a $400m revolving credit line.

In the complaint, BlockFi alleges that on 9 November – two days before FTX filed for bankruptcy – Emergent agreed to guarantee the payment obligations of an unnamed borrower, later identified as FTX’s sister company Alameda - by pledging “common stock” as security. The common stock refers to SBF’s HOOD holding, according to the FT.

Meanwhile, SBF was reportedly looking to sell his HOOD holding in an attempt to solve the liquidity crunch at his platform around the same time.

Markets in this article

HOOD
Robinhood Markets Inc (Extended Hours)
23.53 USD
-0.12 -0.510%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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