In 2022, Sam Bankman-Fried made a lot of investments in different crypto companies, one of which was Robinhood. He made an investment of $648 million to acquire 7.6% of the company, but the value of the stocks has tanked since then. And now, after the collapse of FTX, SBF has been sued by BlockFi over the ownership of the Robinhood shares.
SBF gets sued over Robinhood shares being pledged as collateral
Sam Bankman purchased Robinhood shares by taking funds from Alameda Research firm. However, after making the investment, Alameda took a loan by pledging those shares as collateral from BlockFi. This information was recently revealed in the bankruptcy proceedings of the firm. This is why BlockFi has now sued SBF for using those shares as collateral and defaulting. It also seems like SBF planned this because he pledged those shares just days before FTX collapsed. In fact, he was trying to raise billions of dollars before filing for bankruptcy on November 11.
BlockFi demands that SBF turns over the collateral to them. They have filed for bankruptcy protection and have over 100,000 creditors with assets and liabilities, both ranging from $1B-$10B. BlockFi also alleged that its collapse was because of its exposure to SBF and its defaulting on this huge loan. This resulted in a major liquidity crisis for them. BlockFi says that they had an agreement where the company pledged “common stock” as collateral and identified Alameda Research as the borrower.
Now the problem is Sam Bankman was trying to sell Robinhood shares privately even though it was pledged as collateral to BlockFi. So, he broke their agreement.
About BlockFi
BlockFi was a secured non-bank lender that provided USD loans to owners of digital assets who pledge such assets as security. Their goods satisfy the demands of both people and institutions holding blockchain assets and add to the sector’s liquidity. BlockFi provides loans in USD to customers’ bank accounts while storing their clients’ Bitcoin and Ether with a registered custodian. Currently in beta launch, lending to businesses and retail investors in 35 US states. They filed for bankrupcy on Novembr 11th under chapter 11 of the US Bankruptcy code.
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