FTX co-founder Sam Bankman-Fried has filed a court action seeking to block debtors from taking control of his roughly $450 million stake in brokerage Robinhood.
Lawyers for the disgraced exchange boss argued the shares do not belong to any of the FTX-related entities now in bankruptcy proceedings, and that Bankman-Fried needs the money to fund his legal expenses, according to a court filing dated Thursday.
FTX, sister hedge fund Alameda Research and other related firms now in bankruptcy and under the control of court-appointed liquidators are seeking access to any assets they can find in order, including the Robinhood shares, to repay roughly 1 million creditors of FTX.
Failed crypto lender BlockFi, a lawsuit filed by an FTX creditor, and also the U.S. Department of Justice have all also sought control of the shares.
Bankman-Fried and fellow FTX co-founder Gary Wang bought their 56.2 million share stake in Robinhood via special purpose vehicle Emergent Fidelity Technology. The two men borrowed money via promissory notes in order to purchase the shares from Alameda, the petition said.
"The FTX Debtors seek to disregard the separate existence of a corporation that is not a party to this action and encumber hundreds of millions of dollars’ worth of assets to which they have no legal claim," Bankman-Fried's petition said.
Bankman-Fried is relying on his stake in Robinhood to fund his criminal defence, the petition said. “The withholding of costs necessary to an adequate criminal defense can constitute irreparable harm,” the petition added, citing a past court decision. ''Conversely, the FTX Debtors face only the possibility of economic loss.''
Yogita Khatri contributed to this story.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
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