Bankrupt BlockFi is suing the founder of FTX

Sam Bankman-Fried, the founder of FTX, allegedly pledged his share of Robinhood as collateral to the now-bankrupt BlockFi.

BlockFi is suing Sam Bankman-Fried

Recently bankrupt crypto lender BlockFi is suing Sam Bankman-Fried, CEO of FTX, to obtain shares of Robinhood that he allegedly pledged to the company as collateral earlier this month.

The filing, initially reported by The Financial Times, came just hours after BlockFi filed for bankruptcy. In doing so, it referred to a liquidity crisis caused by the exposure to the FTX exchange of Bankman-Fried and Alameda research.

The prosecution alleges that Bankman-Fried’s Emergent Fidelity Technologies, in conjunction with ED&F Man, owns the collateral belonging to BlockFi. ED&F Man is a London-based financial services company that acted as a broker for Bankman-Fried.

These assets were pledged to BlockFi under the terms of an agreement signed on November 9.

Bankman-Fried bought his 7.6% stake in the app Robinhood in May 2022. This stock was worth about $600 million at the time, according to the U.S. Securities and Exchange Commission.

The filing, filed in the same New Jersey court where BlockFi opted for bankruptcy protection, alleges that Bankman-Fried “has defaulted on its obligations under the agreement.” In addition, it alleges that Bankman-Fried has failed to fulfill its obligations despite written notice.

The bankrupt lender said it will now try to enforce the terms of the agreement. In addition, the company wants to reclaim its collateral.

BlockFi is not the only example

The Financial Times also alleges, citing unnamed and unconfirmed sources, that Bankman-Fried listed its stake in Robinhood on its list of assets. Earlier this month, he made last-ditch efforts to raise money from investors to save FTX.

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BlockFi is not the only one Bankman-Fried promised huge sums to bail out other troubled companies during the harsh crypto winter earlier this year.

In August 2022, FTX offered to buy troubled crypto lender Voyager for $70 million. The company is now looking for a new buyer.

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