.$456 million worth of Robinhood shares are up for grabs, or are they? In a move that is sending shockwaves throughout the crypto community, the United States Department of Justice has seized 55 million shares of the company Robinhood.
The now Robinhood saga all began several months ago when now-disgraced billionaire Sam Bankman-Fried went out of his way to purchase a stake in the trading company. At the time, crypto was at its highest, and purses were heavy all around.
Flash forward to the end of 2022, when several parties began to fight over shares in Robinhood belonging to Sam Bankman-Fried. Those looking to gain ownership included Bankman-Fried, BlockFi, an FTX creditor, and FTX itself. This is when US prosecutors stepped in looking to seize the shares, claiming they are not the property of a bankrupt estate.
Who Do These Robinhood Shares Really Belong To?
Bankman-Fried originally purchased the 7.6% stake, or 56 million shares, in investment app Robinhood for $648 million, but the price has since dropped to around $460 million. Despite the decrease in value, it is one of the most valuable assets remaining, making it highly sought after.
Let’s get back to basics and talk about who exactly wants these elusive shares and why?
As of the time of writing, there have been multiple claims, with the first being from Bankman-Fried, who believes he is entitled to the shares. On the other hand, FTX wants to gain as much as it can to deal with investor funds that were caught up in Bankman-Fried’s fraud.
There has also been movement from BlockFi. They claimed Alameda Research promised to secure $1 billion in loans that included the stake. Lastly, a creditor, Yonatan Ben Shimon, has laid claim to the shares.
What Does the DOJ Have to Say?
The United States Department of Justice has other plans for the beleaguered, and some might even say, “cursed” shares; US attorney Seth Shapiro told US Bankruptcy Judge John Dorsey, who is overseeing FTX’s bankruptcy, that the Department of Justice does not believe the shares of Robinhood are part of the bankruptcy estate. Instead, Shapiro thinks the competing claims can be settled during a forfeiture proceeding.
However, the Robinhood stake is not the only asset being seized. Multiple assets tied to the fallen crypto exchange are in the process of being seized.
The US government is not the only one on the move as the case against Bankman-Fried builds. The Bahamian Securities Commission announced the seizure of $3.5 billion. These were digital assets belonging to the Bahamas-based entity of the company, FTX Digital Markets.
The regulator said that the intent of the seizure was for “safekeeping”. They plan to return the tokens to their owners when allowed. The assets were seized based on information provided by Bankman-Fried.
According to the Bahamian Securities Commission, there was a risk of “imminent dissipation” of the assets. This was due to concerns, including cyberattacks against the exchange.
US & Bahamian Governments Come Out On Top
Ultimately who won the battle to gain access to these highly prized shares? Well, that would be the United States government and the Bahamian government. Neither SBF nor any of his compatriots will be privy to the now-lost Robinhood shares. They will be well kept on a server in the DOJ for who knows how long to come.
Many are asking the obvious, however: what about the customers? Are they not due their fair share of the Robinhood pie despite the fact that they are in the hands of the governments?
The share may be in captivity, but their ownership will be contested for many months, even years to come.
Leave a Reply