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FTX seeks court intervention over $450M Robinhood shares dispute



In a dispute over ownership of Robinhood Markets (HOOD) stock valued at roughly $450 million, FTX requested assistance from a U.S. bankruptcy court, according to a court filing on Thursday.

In question are roughly 56 million shares of the brokerage held by Emergent Fidelity Technologies Ltd., a company registered in Antigua and Barbuda and controlled to 90% by Sam Bankman-Fried, a former CEO of FTX, according to the filing.

According to the filing, BlockFi, a lender that FTX assisted in supporting earlier this year, Yonathan Ben Shimon, an FTX creditor who was appointed as a receiver in Antigua and given permission to sell the shares while being supervised by a court there, and Bankman-Fried himself have all attempted to gain control of those shares.

Around the time the Chapter 11 bankruptcy case started on November 11, the bankruptcy estate for FTX instructed the brokerage where the shares are parked, ED&F Man Capital Markets, to freeze the stock. FTX has found that Emergent only “nominally” holds the shares and that they belong to FTX. The crypto exchange stated in the filing that “Emergent is a special-purpose holding company that appears to have no other activity.”

The asset should be frozen until this Court can address the concerns in a way that is equitable to all creditors of the Debtors, according to FTX, which noted that numerous prepetition creditors of various Debtors and Mr. Bankman-Fried are all vying for control of the Robinhood Shares.


Will FTX users get refunded?

The beginning of FTX’s court proceedings has left their users whose funds have been lost in a dilemma regarding their fate in getting their funds back. Recent revelations in the space have been giving a glimpse of hope to users on getting refunded. One of these is the report by FTX’s new management that FTX has over $1B in cash, which is being held in different bank accounts, and efforts are being made to get these funds back. Giving a breakdown of these assets, FTX’s chief financial officer, Mary Cilia, revealed that about $130 million of cash is locked up in Japan, another $6 million was mentioned by Cilia to be kept for operational expenses, $423 million being held in unauthorized U.S. institutions and $485 million which is already in an authorized deposit institution.

This court filing has also solidified the hope of users to get a refund. FTX, in the filing, pleaded with the court to freeze the Robinhood assets until they can repay their creditors and users. This added clause gives a kind of reassurance to users who have their funds stuck that the hope for a refund exists. Furthermore, the presence of another form of liquidity in Robinhood also suggests that the possibility of a refund is not ruled out.

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