U.S. DOJ to Seize $465 Million in Robinhood Shares Linked to Bankman-Fried, Reports Reuters

By Tom Hals and Dietrich Knauth

U.S. prosecutors are in the process of seizing shares of Robinhood Markets Inc tied to Sam Bankman-Fried, who faces fraud charges related to the collapse of the FTX cryptocurrency exchange, a U.S. attorney announced in court on Wednesday.

During the proceedings, U.S. attorney Seth Shapiro informed Bankruptcy Judge John Dorsey, who is overseeing the FTX case, that the Department of Justice does not consider the 56 million shares of Robinhood—valued at approximately $465 million—to be part of a bankruptcy estate.

Shapiro indicated that conflicting claims to the Robinhood shares could be addressed in a forfeiture proceeding. Various parties, including the bankrupt crypto firm BlockFi, FTX, and liquidators in Antigua, along with Bankman-Fried, have laid claim to the shares.

Prosecutors have accused Bankman-Fried of running a long-term scheme involving significant fraud that allegedly cost investors, customers, and lenders billions of dollars. They allege he misused customer deposits to support his Alameda Research hedge fund.

Bankman-Fried has pleaded not guilty to several counts of wire fraud and conspiracy. Although he has admitted to risk-management failures at FTX, he maintains that he does not believe he bears criminal liability.

According to an affidavit filed in December in an Antigua court, Bankman-Fried acquired about 7.42% of Robinhood’s stock through Emergent Fidelity Technologies Ltd, using funds borrowed from Alameda Research. He claims to own 90% of Emergent, while Gary Wang, a former executive at FTX, holds the other 10%. Wang has pleaded guilty to fraud charges linked to the FTX collapse and is cooperating with the prosecution.

Shapiro also disclosed that prosecutors have seized U.S. bank accounts associated with FTX’s operations in the Bahamas, known as FTX Digital Markets. Court documents reveal these accounts, held at Silvergate Bank and Farmington State Bank (doing business as Moonstone Bank), contain approximately $143 million.

James Bromley, an attorney representing FTX, informed Judge Dorsey that none of the targeted assets for seizure are currently under the control of any FTX entities involved in Chapter 11 bankruptcy. He noted that the ownership of the Robinhood shares is still under dispute.

The Robinhood stock closed at $8.36 per share on Wednesday and is also claimed by BlockFi and the liquidators of Emergent, which is undergoing insolvency proceedings in Antigua.

BlockFi is pursuing legal action against Emergent to claim the Robinhood shares, which were pledged by Alameda as collateral for a loan from BlockFi. Notably, two days after this pledge, Alameda filed for bankruptcy along with FTX.

As of now, neither BlockFi nor Robinhood has responded to requests for comment.