Sam Bankman-Fried has argued that he should retain control of approximately $450 million in shares of the financial trading app Robinhood, despite a competing claim by the estate of the bankrupt crypto exchange FTX, which he founded and once ran.
In addition to Bankman-Fried and co-founder Gary Wang, bankrupt crypto lender BlockFi and the U.S. Department of Justice are involved in a legal battle over 56 million shares.
FTX, now under the direction of restructuring expert John Ray, filed a bankruptcy petition on Dec. 22 asking the Delaware bankruptcy court to freeze the shares until they can be divided fairly among FTX’s creditors. Liquidators in the Bahamas supported its claim.
He argued that FTX’s trading arm, Alameda Research, had legitimately loaned him money in order to buy the shares and that the loan was documented, in a filing made Thursday. BlockFi, a lender that FTX attempted to rescue last year before it too filed for bankruptcy, also contested the attempt to assume control of the shares in a separate filing on Thursday.
Bankman-Fried, who pleaded not guilty this week to charges including money laundering and conspiracy to commit wire fraud, resigned as CEO on Nov. 11, the same day the company went bankrupt due to allegations of a blurring of lines between FTX and Alameda.
In December, FTX argued that Emergent Fidelity, which was 90% owned by Bankman-Fried and 10% by Wang, was a shell company whose interests were “sufficiently identical” to those of the larger company. Ray has previously complained about FTX’s poor record-keeping, particularly transfers to staff without proper loan documentation.
In any case, the filings admit, the debate may be academic now that the US Department of Justice informed the court on Wednesday that it was seizing the shares as part of its proceedings against Bankman-Fried.