BlockFi’s bankruptcy judge may decide to transfer $430 million worth of Robinhood shares to a neutral broker or escrow account for the duration of the proceedings.
During a court hearing this Wednesday, Michael Kaplan agreed to review BlockFi’s request to move 56 million Robinhood market shares worth $430 million to a neutral broker, which are currently in possession of Sam Bankman-Fried’s company, Emergent Fidelity Company. The ruling is scheduled for a Jan. 9 hearing.
On Nov. 28, the same day BlockFi filed for Chapter 11 bankruptcy, the company also filed a lawsuit against Sam Bankman-Fried for Robinhood shares. Allegedly, Sam Bankman-Fried’s company, Emergent Fidelity Technologies, failed to pay the previously agreed collateral to BlockFi on Nov. 9. BlockFi also claimed that the Robinhood shares were not repaid as collateral for a $600 million loan previously made to Alameda Research.
Read more: BlockFi sues SBF over Robinhood shares
This week, new details emerged in the case. It turns out that Sam Bankman-Fried used Alameda Research money to buy Robinhood stock. SBF and another FTX co-founder, Gary Wang, borrowed $546 million from the broker in April and May. After Emergent Fidelity Technologies bought Robinhood shares, Alameda allegedly pledged those assets to crypto lender BlockFi.
Related: FTX messes with Robinhood shares
Meanwhile, FTX asked the judge to determine the claims made by BlockFi. FTX and Alameda based this request on the fact that the companies filed for bankruptcy before BlockFi. Allegedly, the lawsuits were to save the companies from other debt-collecting efforts. FTX argued that the Robinhood shares should remain in possession of Emergent Fidelity Technologies until the bankruptcy proceedings are completed. According to FTX, this will “ensure that all creditors – including BlockFi and the others – can participate in an orderly claims process”.
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