Bankrupt BlockFi sues FTX’s Sam Bankman-Fried over Robinhood shares – report
Cryptocurrency lender BlockFi is reportedly suing Emergent Fidelity Technologies, the company of FTX’s embattled founder Sam Bankman-Fried for how it used its shares in investing app Robinhood, sending yet another tremor through the crypto market.
Citing loan documents, the Financial Times reported on Monday that Robinhood shares held by the company pledged to use BlockFi as collateral. The news came as BlockFi filed for bankruptcy protection on the same day.
Cryptocurrencies, and especially lenders and exchanges, have been under pressure since FTX’s colossal demise this month which has contaminated the industry.
FTX was a company valued at $32 billion before it filed for bankruptcy on November 11 following reports of a liquidity crisis, resulting in customers damanding withdrawals.
Adding to the pressure, rival exchange Binance went back on a nonbinding agreement to buy the company.
Investigations in the wake of the collapse have since exposed gross negligence in how FTX was run.
Trying to raise money before FTX’s collapse, Bankman-Fried was still trying to sell his Robinhood shares, the Financial Times reported.
The newspaper said BlockFi and Emergent Fidelity Technologies went into an agreement on November 9 to guarantee payment by an unnamed borrower and pledged an unnamed stock as collateral.
Citing legal sources, the FT reported the borrower was another of Bankman-Fried’s company’s Alameda Research.
BlockFi, was last valued at around $4.8 billion (€4.6 billion), according to PitchBook. In the bankruptcy filing, the company indicated that it had more than 100,000 creditors, with liabilities and assets ranging from $1 billion (just under €1 billion) to $10 billion.
BlockFi also listed an outstanding $275 million (€265 million) loan to FTX US, the American arm of FTX.
“We do have significant exposure to FTX and associated corporate entities that encompasses obligations owed to us by Alameda, assets held at FTX.com, and undrawn amounts from our credit line with FTX.US,” BlockFi said.
According to CNBC, citing people familiar with the matter, BlockFi started talking with restructuring professionals in the days after FTX’s bankruptcy filing.
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