Outside Source
BlockFi sued Sam Bankman-Fried over Robinhood shares he allegedly pledged to the lender as collateral, according to reports on November 29, 2022.
BlockFi seeks to recover collateral from SBF
Bankrupt cryptocurrency lender BlockFi is suing Sam Bankman-Fried in a bid to seize shares in Robinhood that the FTX founder allegedly pledged as collateral just days before his exchange collapsed earlier this month.
BlockFi, in a complaint filed on Monday, November 28, 2022, in New Jersey bankruptcy court, said Emergent Fidelity Technologies Ltd, a company belonging to SBF, has defaulted on its obligations under a Nov. 9 pledge agreement.
Per sources close to the matter, the lawsuit came just hours after BlockFi filed for bankruptcy protection after being severely exposed in the FTX collapse that has caused a domino effect in crypto in recent weeks, rendering many companies bankrupt.
SBF, through Emergent, owned about 56.2 million shares which constitute 7.6% of Robinhood’s Class A common stock, according to a document filed with the Securities and Exchange Commission (SEC).
Over 100k creditors
BlockFi claimed that Emergent guaranteed the repayment of obligations of Alameda Research Ltd, the crypto hedge fund affiliated with FTX, and put in the said Robinhood shares as part of the collateral. It remains to be seen whether BlockFi will win the case and ultimately claim the shares.
However, the now-defunct lending protocol still has a long way to go before it can cover its listed assets and liabilities, which stand at between $1 billion and $10 billion. In addition, BlockFi indicated in its Chapter 11 bankruptcy filing that it owes money to more than 100,000 creditors, including the U.S. SEC. The company also said in a separate filing that it plans to lay off two-thirds of its 292 employees.
The New Jersey-based crypto company’s bankruptcy filing comes after two of BlockFi’s largest competitors, Celsius Network and Voyager Digital, filed for bankruptcy in July, citing terrible market conditions as the reasons for the enormous losses at both companies.
Meanwhile, there have been growing calls for tighter crypto regulations after the FTX debacle. Earlier today, investment banking giant JP Morgan called for more crypto regulations, hinting that the European Parliament might enforce the crypto regulatory initiatives under review sooner than expected.
This article first appeared at crypto.news
