The U.S. Department of Justice (DOJ) is currently holding onto Robinhood shares, worth about $460 million, that are connected to previous FTX CEO Sam Bankman-Fried (SBF)”We accept that these assets are not property of the bankruptcy bequest or that they fall inside the exemptions … of bankruptcy code,” a DOJ attorney told the adjudicator supervising the FTX bankruptcy case.
DOJ is seizing Robinhood Shares linked to FTX
The U.S. government is currently holding onto 56 million shares of Robinhood Markets Inc. (Nasdaq: HOOD), worth about $460 million, that are connected to the shamed FTX founder Sam Bankman-Fried (SBF), said Seth Shapiro, an attorney with the U.S. Department of Justice (DOJ) at a FTX bankruptcy court hearing in Delaware Wednesday.
Shapiro told Judge John Dorsey, who regulates the FTX bankruptcy case:
“We accept that these assets are not property of the bankruptcy home or that they fall inside the special cases … of bankruptcy code.”
According to Robinhood’s filing with the Securities and Exchange Commission (SEC) in May last year, Developing Loyalty Technologies took a 7.6% stake in Robinhood, and Bankman-Fried was its only director and greater part proprietor.
Following the FTX bankruptcy filing, the responsibility for Robinhood shares is questioned by the new FTX management, Bankman-Fried, an individual FTX creditor, and crypto lender Blockfi which also sought financial protection in November last year.
Because of multiple gatherings laying cases to the Robinhood shares, the new FTX management has documented a movement to the Delaware bankruptcy court to keep the assets frozen until the court issues can be determined in a way that is reasonable for all of the debtors.
FTX legal counselor James Bromley said during Wednesday’s hearing: “The inquiry with regards to the responsibility for Robinhood shares was an open inquiry before the seizure took place.” He added:
“We certainly accept we have privileges with respect to those assets … We are in arrangement right now with the U.S. government and the policing in making these strides.”
Bromley focused on that the Robinhood shares being held onto by Federal prosecutors are from accounts that are not right now under the immediate control of the bankrupt FTX.
The DOJ and multiple U.S. regulators, including the SEC, have accused Bankman-Fried of multiple counts of extortion. However, the previous FTX CEO has argued not liable to all charges.