U.S. prosecutors are moving to seize the US$460 million worth of Robinhood Markets Inc., shares linked to Sam Bankman-Fried, the former chief executive officer of Bahamas-based bankrupt cryptocurrency exchange FTX.com, Department of Justice (DOJ) counsel Seth Shapiro told the bankruptcy judge on Wednesday.
See related article: Sam Bankman-Fried used Alameda Research money to buy Robinhood shares
- Shapiro told the bankruptcy court hearing in Delaware that the DOJ does not believe the shares were the property of a bankruptcy estate, and its ownership could be determined in a forfeiture proceeding.
- Bankman-Fried, who is currently awaiting trial after pleading not guilty to fraud charges, and FTX cofounder Gary wang formed a holding company in May 2022 called Emergent Fidelity Technologies Ltd. to purchase 56 million Robinhood shares with US$546 million in loans from Alameda Research, the brokerage arm of FTX.
- Three parties, bankrupt crypto lender BlockFi, FTX creditor Yonathan Ben Shimon and Bankman-Fried, have filed court actions in attempts to gain control of the shares.
- Lawyers for FTX requested in late December that the shares remain frozen as the legal proceedings continue.
- On Dec. 13, new FTX CEO John J. Ray III told congress that the exchange lost US$8 billion of customer deposits and that Bankman-Fried and select executives at the exchange had access to customer funds.
- Bankman-Fried is facing charges of bank and wire fraud, money laundering and conspiracy, and could possibly spend the rest of his life in prison.
- Wang and Caroline Ellison, the former chief of Alameda Research, have both accepted plea bargains for reduced sentences.
See related article: FTX asks court to keep US$450 mln Robinhood shares frozen