Sam Bankman-Fried’s Investment Vehicle Sued by Blockfi

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  • Blockfi has sued Emergent Fidelity Technologies over $680 million worth of loan defaults
  • The bankrupt company wants Sam Bankman-Fried’s investment vehicle to hand over 56.3 million Robinhood shares as compensation
  • Bankman-Fried was desperately trying to offload the shares as FTX was circling the drain earlier this month

One of the odder things to come out of the collapse of crypto lending platform Blockfi was the filing of a lawsuit by the company against an investment vehicle owned by FTX founder Sam Bankman-Fried. The case revolves around $648 million worth of Robinhood shares purchased by Emergent Fidelity Technologies in February, with Blockfi arguing that it should be over as compensation for Alameda Research, FTX’s trading arm, defaulting on $680 million of collateralized loans in early November.

Alameda Stated Robinhood Shares as Assets

Blockfi’s lawsuit against the fluffy-haired sociopath’s investment firm actually came before the company filed for Chapter 11 bankruptcy yesterday, with the company arguing that on November 9, when the turmoil around FTX was at its peak, Alameda Research and Emergent entered into an agreement to guarantee the payment obligations of an unnamed borrower by pledging certain “common stock” as security.

Alameda listed this Robinhood shares as an asset, according to spreadsheets shared with investors when trying desperately to raise funds to save FTX,.

London-based Broker Also Accused

Bankman-Fried is alleged to have been privately attempting to sell his Robinhood shares leading up to FTX’s bankruptcy filing on November 11, and has been accused of continuing to negotiate such sales even after entering into the pledge agreement, as late as November 10. 

Legal correspondence filed along with the complaint shows that ED&F Man Capital Markets has also been named in the lawsuit as Emergent’s broker, with Blockfi claiming that the London-based brokerage had “refused to transfer the Collateral to BlockFi”. It alleges that ED&F Man had declined to transfer the assets “absent an order from the Bankruptcy Court” in the FTX proceedings in Delaware.