•FTX, now under new CEO John J. Ray III, has asked the bankruptcy court overseeing its unwinding to freeze $450 million in Robinhood shares that are currently being held by creditors.
• There are many creditors claiming ownership over these shares, and FTX argues that they should be frozen until the court can resolve the issue in a manner that is fair to all of them.
• The 56 million shares in Robinhood Class A common stock are currently held in a brokerage account in New York City called ED&F Man Capital Markets Inc., and were purchased by Sam Bankman-Fried via a special-purpose holding company organized in Antigua and Barbuda called Emergent Fidelity Technologies.
• BlockFi, the now-bankrupt crypto lender that was initially promised these shares, is one of the creditors hoping to get hold of them. The founder of FTX and its former CEO is also hoping to get hold of the stockpile to pay for his extensive legal fees.
FTX, now under the direction of its new CEO John J. Ray III, issued a plea to the bankruptcy court overseeing its unwinding for assistance in freezing $450 million worth of Robinhood shares that are currently held by FTX’s creditors. This move is anticipated to be a massive boon for the fintech firm as it enters into dissolution proceedings and attempts to settle debts with its creditors following two years of losses attributed to legal issues and other expenses. Ray believes that through this act, FTX will be able to significantly reduce how much money it owes while providing a much-needed reprieve from creditors attempting to recover their investments. Should the court agree with FTX’s proposal, then it could potentially provide the company with the added time needed to completely settle accounts due and make an adequate assessment of their financial situation.
Who Owns the $450 Million in Robinhood Shares?
The disputes between creditors over ownership of shares have been difficult one to resolve. FTX seeks to balance the interests of all parties involved by requesting that the court freeze these contested shares until an equitable decision is made about their rightful owners. In this way, no party would be treated unfairly due to the confusion and controversy around the case, and all creditors will have time to present their claims in court before any shares are dispersed. It is clear that such a decision will not be easy to make, but with everybody’s interests at stake, a solution needs to ensure that nobody is left in an unfavorable situation as a result.
A recent court filing revealed that ED&F Man Capital Markets Inc., a brokerage account located in New York City, is officially listed as owning $450 million in Robinhood shares. However, according to executives from Emergent Fidelity Technologies (EFT), those shares are owned by Sam Bankman-Fried, via EFT. Bankman-Fried is also the CEO of Alameda Research, which has been described as an “over-the-counter trading firm.” Court documents have confirmed that he was indeed one of FTX’s owners, though his exact role has not been disclosed.
Who Wants to Get Hold of the Stockpile?
The speculation surrounding Sam Bankman-Fried’s interest in Robinhood continues to swell. On the one hand, there are creditors hoping to secure repayment through the 56 million shares currently held in a brokerage account in New York City. This includes BlockFi, which filed suit against Bankman-Fried for breach of contract after their bankruptcy filing was announced in November; and Yonathan Ben Shimon, who petitioned an Antigua-based court with regards to Robinhood shares. On the other hand, as FTX’s former CEO, Bankman-Fried is looking internally at his options when it comes to acquiring the prized stock portfolio. What will come of this situation remains to be seen, but further discussions and proceedings are well underway regarding these shares and their potential new owners.
The Impact of Freezing the $450 Million in Robinhood Shares on Creditors
It appears clear that freezing this share stockpile will have a major impact on creditors involved with this case. In order to be fair to all creditors involved with this situation, a resolution must be found soon that allows everyone a fair chance at receiving their owed money or assets. Furthermore, there could potentially be disagreements between creditors over ownership rights when it comes to these Robinhood shares as well as other assets associated with FTX’s unwinding process.
Overall, there are still many questions surrounding this story involving FTX and its unwinding process—most notably, who owns these $450 million worth of Robinhood shares? Regardless, it is clear that a resolution must be found soon that allows all parties involved—specifically creditors—a chance at being paid back what they are owed from FTX’s bankruptcy proceedings. Court action may be needed before any further resolution can occur regarding this issue so only time will tell what happens next for all parties involved with FTX’s bankruptcy case.