BlockFi sues FTX’s Sam Bankman-Fried hours after bankruptcy filing

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  • Block­Fi has sued Sam Bankman-Fried for his shares in Robin­hood, which was used as collateral
  • This comes in on the same day as its chap­ter 11 bank­rupt­cy pro­tec­tion fil­ing in New Jer­sey court

Block­Fi has sued Sam Bankman-Fried for his shares in Robin­hood, an Amer­i­can finan­cial ser­vices provider. Inter­est­ing­ly, this news comes hours after Block­Fi filed for chap­ter 11 bank­rupt­cy pro­tec­tion. BlockFi’s com­plaint seeks Robinhood’s shares as it was report­ed­ly kept as col­lat­er­al by SBF, accord­ing to Finan­cial Times.

Notably, the FTX founder has a 7.6 per­cent share in Robin­hood, which was acquired in May this year. At the time, the shares bought by SBF’s Emer­gent Tech­nolo­gies was worth a whop­ping $648 mil­lion. And, Bankman-Fried is said to have been the sole direc­tor with major­i­ty shares. Inter­est­ing­ly, this move was fol­lowed by plans for a com­plete acqui­si­tion of Robin­hood. How­ev­er, they didn’t come to fruition.

BlockFi files for bankruptcy

The cryp­to lend­ing plat­form, along with its eight affil­i­ates, filed for bank­rupt­cy on Novem­ber 28 at the New Jer­sey Court. The plat­form made the fil­ing days after it sus­pend­ed with­drawals because of FTX’s collapse.

In a press release, the firm stat­ed that it would be recov­er­ing all the mon­ey it is owed as part of its restruc­tur­ing efforts. This would include tak­ing the mon­ey it is owed even by FTX. How­ev­er, the lend­ing plat­form has acknowl­edged that this effort could be delayed due to FTX’s own bank­rupt­cy proceedings.

BlockFi’s finan­cial advi­sor, Mark Ren­zi of Berke­ley Research Group, said,

With the col­lapse of FTX, the Block­Fi man­age­ment team and board of direc­tors imme­di­ate­ly took action to pro­tect clients and the Company

Addi­tion­al­ly, Block­Fi filed for cus­tom­ary motions in order to con­tin­ue its busi­ness oper­a­tions. This includes pay­ing wages, main­tain­ing employ­ee ben­e­fits, and cre­at­ing key employ­ee reten­tion plans. Notably, these motions are yet to get a green light from the New Jer­sey court approval.

Sub­se­quent­ly, the plat­form has also made a move with regard to its Bermu­da sub­sidiary. The press release read,

“In par­al­lel with these chap­ter 11 cas­es, Block­Fi Inter­na­tion­al Ltd. a Bermu­da incor­po­rat­ed com­pa­ny, filed a peti­tion with the Supreme Court of Bermu­da for the appoint­ment of joint pro­vi­sion­al liq­uida­tors pur­suant to sec­tion 161(e) of Bermuda’s Com­pa­nies Act”

BlockFi’s unsecured claims to SEC is in millions

The bank­rupt­cy peti­tion filed by Block­Fi shed some light on its finan­cial con­di­tions. Accord­ing to it, the lend­ing plat­form has over 100,000 cred­i­tors, with assets and lia­bil­i­ties falling between $1 bil­lion and $10 bil­lion. More­over, the top three cred­i­tors of the plat­form are Anku­ra Trust, FTX US, and the SEC.

All three have an unse­cured claim in mil­lions, with Ankura’s claim stand­ing at $769 mil­lion. Mean­while, the FTX US has an unse­cured claim of $275 mil­lion, while the SEC has a claim of $30 million.

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