The U.S. Department of Justice seized 55,273,469 Robinhood shares as part of the case against FTX founder Sam Bankman-Fried.
The value of the securities was about $456 million (as of the close of trading on January 6). More than $20 million also came under the department’s control. The funds were held by the brokerage ED&F Man Capital Markets.
“The seized assets constitute property involved in crimes such as money laundering and fraud involving electronic means,” the document states.
In late December 2022, Bankman-Fried, in testimony to the court, said that together with FTX co-founder Gary Wang founded a company Emergent Fidelity Technologies to purchase a 7.6% stake in Robinhood.
The deal closed on May 13 — the firm acquired 56.28 million shares of the online broker for $648.29 million.
In July, the U.S. unit FTX entered into a deal with BlockFi. The agreement provided for the issuance of a revolving credit facility to the crypto lending platform of $400 million and an option to buy it for $240 million.
On November 28 BlockFi initiated bankruptcy proceedings in the United States. On the same day it filed a complaint against Emergent Fidelity Technologies, seeking the return of the collateral held at ED&F Man Capital Markets.
Subsequently the platform filed a lawsuit against the firm. According to documents, on November 9 Emergent Fidelity Technologies entered into an agreement with BlockFi guaranteeing payment for an unnamed borrower. As collateral they used “ordinary shares”.
According to media reports, the dispute concerned Robinhood shares. Journalists also obtained lending documents indicating that the subject of the dispute was Robinhood shares.
In December FTX filed for court protection for the Robinhood stake from creditors.
Earlier, the U.S. Department of Justice charged Bankman-Fried with eight criminal counts, including conspiracy and wire fraud. He pleaded not guilty.
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