- SBF and Gary Wang bought a 56.2 million stake in Robinhood.
- Sam would be using this to finance the legal battle.
- Debtors from Alameda, BlockFi and FTX are trying to access the fund.
FTX was once the third largest cryptocurrency exchange in the world, and some people said that Sam Bankman-Fried would be the future of the industry. But then, a chain of events followed that led to FTX filing for Chapter 11 bankruptcy on November 11, 2022. Sam is not facing legal trials in which he has pleaded not guilty to all charges. And now he had filed a court action asking debtors on the block to take control of a roughly $450 million stake in Robinhood.
According to court documents filed Thursday, Sam's lawyers asserted that the shares in question do not belong to any of the FTX-related entities, which are now in bankruptcy proceedings. In addition, Bankman needs this money to finance legal expenses.
Alameda Research and other companies in this bankruptcy case are now under the control of a court-requested trustee. They are actively seeking any access they can get to any of the assets at stake to pay off approximately 1 million of FTX's creditors. The list of options also includes the Robin Hood actions in question.
Many entities are trying to gain access to such funds, including failed crypto lender BlockFi, FTX creditors, and the Department of Justice (DoJ).
The petition said Sam Bankman-Fried and former FTX CTO Gary Wang, who had pleaded guilty with Caroline Ellison, bought a $56.2 million stake in Robinhood through a special purpose vehicle called Emergent Fidelity. Technology. They borrowed the amount through promissory notes to buy the Alameda shares.
The petition filed by Sam Bankman-Fried further states:
"FTX's debtors seek to ignore 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 right."
Sam has been relying heavily on his Robinhood holdings to finance the expensive legal battle. Furthermore, the petition argues that if the fund were withheld, it would be irreparable harm, as Sam and his team would not be able to bear the costs of proper criminal defense.
Sam Bankman-Fried currently has a $250,000 personal bond and lives with his parents in California. During his second court appearance, unsurprisingly, Sam pleaded 'Not guilty' on all eight charges, while Caroline Ellison and Gary Wang pleaded 'Guilty' and they could be working as primary witnesses in the case.
The court said the trial could start in October 2023, and this time should be enough for both sides to gather the evidence and dig deeper into this multi-billion dollar hoax.
Experts say there is a chance the matter could be settled out of court, as often during these white-collar crimes, a settlement is reached between the defendant and the plaintiffs.
