Bankrupt BlockFi has launched a lawsuit to get Sam Bankman-Fried to reportedly hand over Robinhood shares
Chukrut Budrul/ SOPA Images/ LightRocket/ Getty Images
- BlockFi has sued Emergent Fidelity Technologies to recover stock pledged as collateral for a loan.
- The crypto lender says it wants Sam Bankman-Fried's holding company to hand over the shares.
- The collateral is Robinhood stock and the borrower was Alameda Research, the FT reported.
Bankrupt cryptocurrency lender BlockFi has sued FTX founder Sam Bankman-Fried's holding company to recover Robinhood shares pledged as collateral for a loan, the Financial Times has reported.
The lawsuit was filed in New Jersey court Monday, the same day BlockFi filed for Chapter 11 bankruptcy protection, a victim of the collapse of the once-$32 billion FTX crypto empire.
In the complaint, BlockFi said it had made an agreement with Emergent Fidelity Technologies, which pledged unnamed common stock to guarantee repayments by an unnamed borrower.
It said Emergent — whose sole director and majority stakeholder is Bankman-Fried — had defaulted on its obligations under the November 9 deal.
Court documents identified the borrower as Alameda Research, the sister trading arm of crypto exchange FTX.
Meanwhile, loan documents seen by the FT showed the collateral pledged was Bankman-Fried's stake in Robinhood, the FT report said. He took a 7.6% share in the online brokerage earlier this year, an SEC filing by Emergent shows.
Bankman-Fried and BlockFi did not immediately respond to an Insider request for comment.
In the days before FTX went bust, Bankman-Fried scrambled to raise funds to plug a shortfall of up to $8 billion in a liquidity crunch. He was trying to sell his Robinhood shares after Emergent entered the agreement with BlockFi, the FT reported, citing two people familiar with the matter.
BlockFi has demanded that Emergent surrenders all the collateral to it immediately, or liquidate the stock and transfer the proceeds. Bankman-Fried is not named as a defendant in the lawsuit.
The world of crypto has been shaken by fears the financial problems that took down FTX would spread to other firms, and BlockFi is just one victim. Crypto brokerage Genesis Trading has joined a growing list of companies affected, signaling it's at risk of bankruptcy if it doesn't receive sufficient funding.
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