Bankrupt BlockFi Wants Bankman-Fried’s $520M Robinhood Stake


Crypto lender BlockFi has sued a Sam Bankman-Fried holding firm over his Robinhood inventory, simply hours after the crypto lender filed for chapter.

Bankman-Fried pledged the shares to BlockFi as collateral on Nov. 9 — supposed to again Alameda Analysis’s cost obligations on $680 million in loans — the identical day Binance walked again plans to rescue FTX.

Bankman-Fried’s tangled internet of firms would declare chapter two days later, with BlockFi now following swimsuit. BlockFi opted to droop withdrawals after Alameda (an FTX-linked buying and selling unit) defaulted on the loans, per court docket paperwork, indicating BlockFi actually wanted that cash.

BlockFi’s lawsuit is directed at Bankman-Fried’s Emergent Constancy Applied sciences, which the previous crypto billionaire used to take a 7.6% stake within the low cost brokerage in Could, equal to greater than 56 million shares now price about $521 million.

ED&F Man Capital Markets (EDFM) is listed as Emergent’s dealer within the swimsuit. BlockFi claims the London-based agency declined to switch the collateral to BlockFi and thus did not fulfill its obligations.

BlockFi attorneys wrote: “Because the holder of the primary precedence safety curiosity within the collateral, which is property of the BlockFi chapter estates, BlockFi is entitled to have all such collateral instantly surrendered to it and/or liquidated in no matter method essential to protect as a lot worth as potential with the proceeds from any and all such gross sales transferred to BlockFi.”

Bankman-Fried, who reportedly shopped his Robinhood stake at the same time as he supplied it for collateral to BlockFi, isn’t immediately named as a defendant within the swimsuit. Blockworks has reached out for remark. 

With no Robinhood inventory, BlockFi bought $239 million in crypto

BlockFi’s swimsuit over the Robinhood inventory swiftly adopted BlockFi lodgement for Chapter 11 bankruptcy, which acknowledged the former tech unicorn confronted a “extreme liquidity crunch” all through the collapse of FTX and its subsidiaries. 

FTX was meant to be BlockFi’s white knight. Bankman-Fried struck a deal to doubtlessly purchase the lender for as much as $240 million amid the primary industry-wide downturn earlier this 12 months.

In early November, BlockFi made a borrowing request underneath an FTX mortgage settlement a part of the acquisition deal. FTX didn’t honor the request, court docket paperwork present.

BlockFi’s personal demise naturally means the FTX bailout deal is now invalid.

A declaration filed by BlockFi authorized counsel on Monday confirmed the lender bought nearly $239 million in crypto to bolster money for administrative prices. The agency believes this quantity will probably be sufficient to fund its chapter, so it’s not looking for debtor-in-possession financing in the intervening time. 

Questions stay as as to if that meant BlockFi dumped customer-deposited funds to cowl authorized prices. BlockFi didn’t return Blockworks’ request for remark by press time. 

Earlier than the lender filed for chapter, some two-thirds of BlockFi’s remaining 300 workers had been warned of impending job cuts, firm adviser Mark Renzi stated in a declaration.

FTX’s troubles has left the corporate with “no selection” however to hunt court docket safety, he added. BlockFi now desires to arrange a standalone reorganization in court docket fairly than promote itself, however is open to options that maximize worth for its some 100,000 collectors.

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