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