The US Department of Justice (DOJ) has taken control of shares in popular trading app Robinhood worth over $456 million, which are linked to Sam Bankman-Fried, despite objections from the legal team of the former CEO of now-bankrupt crypto-exchange FTX.
A filing from the Commercial Litigation branch of the DOJ Civil Division on January 6th has informed the bankruptcy court in New Jersey that the shares are now in the possession of the US government. The filing states that the assets were seized due to alleged violations of money laundering and wire fraud criminal statutes. The court also ruled that these assets do not belong to the bankruptcy estate.
This move comes after FTX filed for bankruptcy in November, as the crypto exchange was unable to meet its customers withdrawal requests. Bankman-Fried is currently facing an eight-count indictment, which is related to the alleged misappropriation of billions of dollars worth of customer funds.
In an affidavit filed with the Eastern Caribbean Supreme Court on December 12th, Bankman-Fried stated that he and FTX’s chief technology officer, Gary Wang, borrowed funds from a sister firm of FTX called Alameda Research to fund a shell company called Emergent Fidelity Technologies. This company then purchased the shares of Robinhood. Bankman-Fried owns 90% of Emergent Fidelity Technologies.
Bankman-Fried’s legal team is arguing that Emergent is not related to the insolvency of FTX and should not be part of the bankruptcy proceedings. They also claim that the former crypto-billionaire needs the shares to fund his legal defense.