As creditors swarm to seize $450 million in HOOD stock, FTX tries to freeze shares of Robinhood

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According to court documents, FTX Trading Ltd., Alameda Research, Sam Bankman-Fried, and other debtors want 56 million shares of Robinhood stock frozen after numerous creditors are attempting to access the funds (SBF).

A court filing requests that claims regarding FTX’s 56 million Robinhood shares be placed on automatic hold.

According to court records, debtors from FTX want to freeze 56 million Robinhood shares on December 22, 2022. These shares are held by Emergent Fidelity Technologies, a subsidiary created by SBF. The debtors from FTX and Alameda claim that a number of parties, including the now-defunct crypto lending company Blockfi, are attempting to seize these assets. The court should impose an automatic stay on any claims for the 56 million Robinhood shares, which are worth about $450 million, according to FTX.

ED&F Man Capital Markets Inc. (EDFM) in New York City is the current custodian of the Class A Common Stock Robinhood shares. The ownership of the $450 million worth of Robinhood stock is not contested by EDFM. According to court documents, Yonathan Ben Shimon and SBF are likewise attempting to acquire the shares, in addition to BlockFi Inc. The debtors have “at least a ‘colorable’ claim to ownership of the Robinhood Shares,” according to FTX, which maintains in court.

The asset should be frozen until this Court can resolve the issues in a way that is fair to all creditors of the Debtors, the FTX court filing filed on Thursday evening explains. “The fact that multiple prepetition creditors of different Debtors and Mr. Bankman-Fried are all seeking to obtain possession of the Robinhood Shares demonstrates that the asset should be frozen.” The Robinhood Shares will be unquestionably estate property, according to the full evidentiary record once it has been developed, said FTX.

According to the filing, Caroline Ellison, the former CEO of Alameda, came close to selling the Robinhood shares in an over-the-counter (OTC) transaction. Ellison later pledged the shares to Blockfi in an effort to start a deal that would prevent the troubled cryptocurrency lender from going into default and declaring bankruptcy. According to the court document, Blockfi CEO Zac Prince “accepted Ms. Ellison’s offer to pledge the Robinhood Shares and certain other Alameda assets as security for Alameda’s debts.”

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