Department of Justice prosecutors plan to seize $465 million of Robinhood shares tied to Sam Bankman-Fried, the former CEO of bankrupt cryptocurrency exchange FTX.
In May, Bankman-Fried purchased a 7.6 percent stake in Robinhood, worth approximately $648 million at the time, according to a Securities and Exchange Commission (SEC) filing. The revelation sent the stock soaring more than 20 percent.
Court documents revealed that Bankman-Fried and FTX co-founder Gary Wang borrowed $546 million from Alameda Research through promissory notes in April and May. They then used those funds to capitalize Emergent Fidelity Technologies, which had purchased a sizable stake in the mobile trading app.
According to The Wall Street Journal, U.S. Attorney Seth Shapiro told U.S. Bankruptcy Judge John Dorsey, who is responsible for overseeing the FTX bankruptcy, that the 56 million shares were not the property of a bankruptcy estate. Instead, Shapiro argued that competing claims from FTX, bankrupt crypto firm BlockFi, and Emergent liquidators in Antigua could be resolved in a forfeiture proceeding….