Latest Headache for FTX Creditors: DOJ Seizes Robinhood Stock Tied to SBF

FTX attorneys had previously tried to lay their own claims to the outstanding shares


rblfmr/Shutterstock modified by Blockworks


A three-way fight between the FTX’s bankruptcy saga’s most influential players has been put on hold.   

US prosecutors on Wednesday moved to take custody of roughly 56 million Robinhood shares that had become enmeshed in the insolvency of the crypto exchange Sam Bankman-Fried founded, according to court filings and multiple reports. 

The shares, worth north of $460 million by Wednesday’s after-hours trading session, are at the heart of an onerous ownership dispute between bankrupt crypto lender BlockFi, Bankman-Fried and one of FTX’s most substantial personal creditors, Yonathan Ben Shimon, a wealthy individual investor who has invested in a host of fintech and crypto startups. The equities have plunged since they’ve been stuck in legal limbo. 

The government’s move is the latest response to a number of bids undertaken by attorneys for FTX and its legal counterparties to litigate — and, in several cases, re-litigate — the ownership of assets that had been shifted and shunted between FTX, Alameda and outsiders. 

Robinhood’s shares should not be deemed a part of FTX’s bankruptcy holdings, The Department of Justice told US Bankruptcy Judge John Dorsey on Wednesday, Reuters reported

Industry participants reacted to the news with the same sort of derision and skepticism that has become the norm with each incremental update to the bankruptcy.

Loading Tweet..

The maneuver by prosecutors on Wednesday to freeze and lay claim to the hundreds of millions of dollars of outstanding Robinhood stock adds an unexpected new wrinkle to sorting out what had already been a thorny and convoluted process. Bankruptcy attorneys previously told Blockworks they expect FTX’s proceedings to take at least a year to play out. 

And, at least for now, it appears to leave BlockFi and Shimon in the lurch for the foreseeable future. They’re now facing a separate type of bankruptcy mechanism, known as a forfeiture proceeding, to make any headway in what they say would make them whole — or, at least, something close to it.

Bankman-Fried had originally snapped up a 7.6% stake in Robinhood in May, allegedly, and at least in part, using Alameda funds to do so. 

Loading Tweet..

FTX’s legal team has previously argued that the shares, which have been under the custody of the brokerage ED&F Man Capital Markets, should be frozen and potentially tapped as a source of liquidity to pay back the exchange’s many, many creditors. There’s also an ongoing FTX bankruptcy case in the Bahamas, in addition to the one playing out in the US. 

And BlockFi, the bankrupt crypto lender that had already been having a tumultuous 2022 prior, sued FTX in late November. The company alleged at the time that Bankman-Fried had put up his Robinhood shares as collateral for a loan BlockFi originated to bail out Alameda Research. 

Late last month, FTX — now run by the veteran insolvency specialist John Ray, a former Enron executive — asked the court to freeze the shares, worth some $450 million at the time, in an attempt to bat down BlockFi’s claim. 

Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.

Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.

Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone


Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.



Bitcoin price predictions are meaningless, so let’s expend our prediction energy on something that actually matters


A new complaint against Elon Musk and Tesla alleges that Musk manipulated both bitcoin and dogecoin


Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet


Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos


As Japan takes important step forward on stablecoins, industry participants say, proposed US laws around such crypto assets remain in flux


Stablecoins offer global financial access and on-chain transactions without limitations, while FedNow falls short in terms of utility, global reach and inclusivity