Sam Bankman-Fried borrowed $546 million from his bankrupt empire to buy Robinhood stock
FTX founder Sam Bankman-Fried said he and former CEO Gary Wang borrowed more than $546 million from Alameda Research to buy a nearly 8% stake in Robinhood Markets Inc, according to court filings.
The couple borrowed the funds earlier this year. The transactions were documented in a series of promissory notes detailed in an affidavit emerged Tuesday in a lawsuit in the US Bankruptcy Court in New Jersey.
The Robinhood stake — about 56 million shares total — is at the center of a multi-jurisdictional ownership dispute unfolding in Antigua, New Jersey and Delaware. FTX, bankrupt crypto lender BlockFi Inc., and a lone FTX creditor are all seeking claims to the shares in separate court cases.
BlockFi is suing Emergent Fidelity Technologies, the company that owns Robinhood stock, for control of those stocks and demands that they repay a loan made to Alameda. FTX lawyers said former Alameda boss Caroline Ellison pledged the shares to BlockFi shortly before FTX collapsed.
Alameda’s borrowing from FTX is at the center of the Bankman-Fried fraud case being fought in Manhattan federal court. It is unclear whether the funds at issue in the bankruptcy dispute came from FTX.
Bankman-Fried confirmed the loans in an affidavit presented earlier this month to a judge in Antigua, where Emergent Fidelity has been placed in bankruptcy proceedings. The company’s attorneys filed the affidavit with BlockFi’s bankruptcy judge on Tuesday. The Wall Street Journal previously reported the news.
In his affidavit, Bankman-Fried said the $546 million in loans from Alameda were “capitalized” in Emergent Fidelity. Bankman-Fried owns 90% of Emergent and Wang owns the rest.
The company then bought 56 million shares of Robinhood, the affidavit said. Bankman-Fried originally filed the affidavit with the Eastern Caribbean Supreme Court in Antigua on December 12, the day of his arrest. He tried to wrest control of Emergent Fidelity from court-appointed liquidators on the island.
It’s one of several struggles Bankman-Fried is facing following last month’s collapse of FTX. The 30-year-old is currently on bail and living in California after Manhattan prosecutors charged him with orchestrating a years-long scam involving billions of dollars in client funds.
Ellison, who pleaded guilty to counts of fraud in a deal with federal prosecutors, signed the loan to Bankman-Fried and Wang, court filings show. Wang has also reached out to Bankman-Fried and struck a deal with prosecutors.
The case is BlockFi Inc v. Emergent Fidelity Technologies Ltd, 22-19361, US Bankruptcy Court, District of New Jersey.
Our new weekly Impact Report newsletter explores how ESG news and trends are shaping the roles and responsibilities of today’s leaders. Subscribe here.
