US Authorities Seize $460M in Robinhood Shares Linked to FTX

US Authorities Seize $460M in Robinhood Shares Linked to FTX

The U.S. Department of Justice (DOJ) revealed that it has taken custody of $450 million worth of Robinhood shares tied to FTX as part of the case against the exchange in a Delaware bankruptcy court hearing.

FTX co-founder Gary Wang and then CEO Sam Bankman-Fried (SBF) established a company called Emergent Fidelity Technologies to buy shares in the popular stock trading platform Robinhood in May 2022. In a Dec. court hearing, SBF admitted to using funds taken in loans from Alameda Research to purchase the shares.

However, the ownership of these shares is disputed between SBF, crypto lender BlockFi, and one of the FTX’s creditors, Yonathan Ben Shimon. On Nov. 29, BlockFi sued SBF over the Robinhood shares, saying that Emergent had guaranteed the repayment of loans of Alameda Research using Robinhood shares as collateral. 

“The seizures that have taken place were ordered by the court in connection with the criminal actions in the Southern District of New York with respect to Mr. Bankman, Miss Ellison and Mr. Wang,” said FTX lawyer James Bromley on Wednesday. “The things that are being seized have to do with the Robinhood stock.”

FTX, which filed for chapter 11 bankruptcy on Nov. 11, had asked the court to weigh in over the ownership of the shares. 

The DOJ said in the hearing that it would release a notice of seizure, listing out all the assets taken from FTX.

Alameda Research CEO Caroline Ellison, SBF, and Wang are all facing a series of charges, including wire and bank fraud, violation of financial laws, and money laundering. 

On Jan. 3, SBF pleaded not guilty to eight criminal charges and denied moving any of the company’s assets since stepping down as CEO in Nov. Currently, the former CEO is serving house arrest in California at his parent’s home. 

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