BlockFi Sues FTX Founder’s Holding Firm Over Robinhood Shares
- Despite claims of the firm being liquid and performing quite well from BlockFi CEO Zac Prince earlier this year, the crypto lender has officially filed for protection under Chapter 11 bankruptcy.
- Just hours after BlockFi filed for bankruptcy, it filed a lawsuit against FTX founder Sam Bankman-Fried’s holding company Emergent Fidelity Technologies for violating a payment agreement.
- The crypto lending platform wants Emergent to hand over $575 million worth of Robinhood (HOOD) stock it borrowed as collateral in early November.
- SBF acquired a 7.6% stake in Robinhood in May this year for a total of $648 million and thus, generated rumors that his exchange might acquire the company.
BlockFi, a crypto lending platform created by Zac Prince and Flori Marquez in 2017, has officially filed for protection under Chapter 11 bankruptcy, and this marks the implosion of another major crypto firm in the past few weeks. However, immediately after filing for bankruptcy, the lender filed a lawsuit against Sam Bankman-Fried, popularly known as SBF, over shares of an American financial services company based in California, Robinhood (HOOD).
The crypto lending firm has now entered one of the many platforms that have been affected by the collapse of the once multip-billion dollar crypto exchange FTX. Interestingly, Bankman-Fried’s holding company Emergent Fidelity Technologies, has been sued by BlockFi as the latter seeks the Robinhood (HOOD) shares that were pleged as colateral back in November.
It has been revealed that the lawsuit was filed on Nov. 28 in the United States Bankruptcy Court for the District of New Jersey immediately after BlockFi filed for bankruptcy in the very same court. This confirms that the crypto lender had been planning to recover the HOOD shares from the holding firm of FTX founder for quite some time.
According to the filing, BlockFi wants Emergent Fidelity Technologies to immediately pay the lender with what it owes, i.e., the shares of Robinhood which was pledged as a part of a payment schedule with the lending firm that the disgraced exchange has allegedly failed to pay. The collateral has been termed as including certain shares of common stock.”
Interestingly, SBF acquired a 7.6% stake in Robinhood in May this year for a total of $648 million and thus, generated rumors that his exchange was interested in the acquisition of the major financial services company. However, the rumors were not true and were turned down by Robinhood which also stated that the founders remain the largest shareholders of the company.
BlockFi Is Now Officially Bankrupt
BlockFi is now officially bankrupt as per a filing with the official authorities. It is crucial to note that the lending platform revealed that it had significant exposure to the bankrupt crypto exchange FTX but its funds were not kept on the platform. Additionally, the platform led by CEO Zac Prince had filed for Chapter 11 bankruptcy along with eight affiliates and listed FTX as its second-largest creditor.
Moreover, as per Bloomberg, court documents show that BlockFi has sold about $239 million in cryptocurrencies to cover bankruptcy costs. The newly bankrupt firm said that what users ultimately get depends largely on whether players fulfill their contracts and the outcome of FTX Group’s bankruptcy.
Recently, Prince stated that his firm won’t go into shutdown mode like Celsius and Voyager Digital pretty confidently.
“Putting BlockFi alongside Celsius and Lehman Brothers in the same sentence is misleading. They were / are bankrupt or insolvent – we are not. I would appreciate you editing this if you’re open to being more accurate with your writing,” said Prince.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
