Sebastian Sinclair

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



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.&nbsp;



The shares, worth north of $460 million by Wednesday&#8217;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.&nbsp;



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.&nbsp;



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, <a href="https://www.reuters.com/business/finance/us-doj-process-seizing-robinhood-shares-tied-bankman-fried-2023-01-04/#:~:text=Jan%204%20(Reuters)%20%2D%20U.S.,told%20a%20judge%20on%20Wednesday." target="_blank" rel="noreferrer noopener">Reuters reported</a>.&nbsp;



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.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Will any of those assets make it to the people who lost their coins? (Note: I never invested in FTX)&mdash; South Beach Desk (@SouthBeachDesk) <a href="https://twitter.com/SouthBeachDesk/status/1610733667164508160?ref_src=twsrc%5Etfw">January 4, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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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 <a href="https://blockworks.co/news/bare-bones-ftx-bankruptcy-filings-are-likely-bad-investor-omen-lawyers-say">at least a year</a> to play out.&nbsp;



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 <a href="https://blockworks.co/news/the-madoff-playbook-how-ftx-creditors-could-get-their-money-back">make them whole</a> — or, at least, something close to it.



Bankman-Fried had originally snapped up a <a href="https://blockworks.co/news/ftxs-sam-bankman-fried-spots-opportunity-in-troubled-markets">7.6% stake</a> in Robinhood in May, allegedly, and at least in part, using Alameda funds to do so.&nbsp;



<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Disgraced FTX founder Sam Bankman-Fried bought a 7.5% stake in the trading platform Robinhood. It turns out that he allegedly used $546 MILLION in illegal funds diverted from his hedge fund for that purchase. SBF=FRAUDSTER-IN-CHIEF. <a href="https://t.co/6F1HSPYrEz">https://t.co/6F1HSPYrEz</a>&mdash; Steve Hanke (@steve_hanke) <a href="https://twitter.com/steve_hanke/status/1609278247296008195?ref_src=twsrc%5Etfw">December 31, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



FTX’s legal team has previously argued that the shares, which have been under the custody of the brokerage ED&amp;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.&nbsp;



And BlockFi, the bankrupt crypto lender that had already been having a <a href="https://blockworks.co/news/how-blockfi-went-from-tech-unicorn-to-crypto-burnout">tumultuous</a> 2022 prior, sued FTX in late November. The company <a href="https://blockworks.co/news/how-blockfi-went-from-tech-unicorn-to-crypto-burnout">alleged at the time</a> that Bankman-Fried had put up his Robinhood shares as collateral for a loan BlockFi originated to bail out Alameda Research.&nbsp;



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.&nbsp;



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BlockFi

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

Shalini Nagarajan

<div id="highlights-block_63204cb30d3db" class="highlights">
 <ul>
 <li>Fidelity has long supported crypto trading and custody for institutional clients</li>
 <li>The move would open more than 34 million brokerage accounts to bitcoin</li>
 </ul>
 
</div>



Fidelity Investments’ retail customers could soon have the option to trade bitcoin directly through the brokerage platform.



The <a href="https://www.wsj.com/articles/fidelity-weighs-bitcoin-trading-on-brokerage-platform-11663008698" target="_blank" rel="noreferrer noopener">Wall Street Journal</a> reported on Monday that the top retirement planner is evaluating how to integrate bitcoin with its 34.4 million brokerage accounts, which would mark one of the largest crypto integrations at a major traditional financial institution to date.



Since 2018, Fidelity has operated a crypto trading <a href="https://www.cnbc.com/2018/10/15/fidelity-launches-trade-execution-and-custody-for-cryptocurrencies.html" target="_blank" rel="noreferrer noopener">business</a> for institutional clients, including hedge funds. In 2020, it <a href="https://www.sec.gov/Archives/edgar/data/1822414/000182241420000001/xslFormDX01/primary_doc.xml" target="_blank" rel="noreferrer noopener">launched</a> a crypto fund called the Wise Origin Bitcoin Index for affluent investors. As of May, the fund had <a href="https://www.sec.gov/Archives/edgar/data/1822414/000182241422000001/xslFormDX01/primary_doc.xml" target="_blank" rel="noreferrer noopener">689</a> investors.&nbsp;



The move hasn’t yet been officially confirmed by the company. “While we have nothing new to announce, expanding our offerings to enable broader access to digital assets remains an area of focus,” a Fidelity spokesperson told Blockworks in an email.



For what it’s worth, Galaxy Digital CEO Mike Novogratz <a href="https://twitter.com/akashpasricha/status/1569335995430215684" target="_blank" rel="noreferrer noopener">said</a> during the SALT Conference on Monday: “A bird told me Fidelity is going to shift their retail customers into crypto soon enough.”



The Boston-based finance giant is the largest US retirement-plan provider, providing employee benefit programs for nearly 23,000 companies. Fidelity is set to be the first of its kind to open 401(k) accounts to bitcoin, giving employers the option to decide whether staff can hold the crypto in their retirement plans, once the program goes live this fall.



One analyst told Blockworks in an email that cryptoassets are a good way to fight inflation, but may not be the best plan for retirement.



“Bitcoin is an investment like shares; it can’t be a retirement plan, one must trade and take profits, not just stake your stack,” said Aarti Dhapte, senior research analyst at Market Research Future.



Dave Gray, Fidelity&#8217;s head of workplace retirement offerings, told the Journal there was a need for a diverse set of products and investment solutions.



That move drew attention of the US Department of Justice, which said it had “<a href="https://www.wsj.com/articles/labor-department-criticizes-fidelitys-plan-to-put-bitcoin-on-401-k-menu-11651197309?page=1" target="_blank" rel="noreferrer noopener">grave concerns</a>” for retirement savers adopting bitcoin. And Fidelity’s competitors haven&#8217;t been too keen on doing the same. Spokespeople for both Vanguard and T. Rowe Price earlier <a href="https://cms.blockworks.co/will-competitors-follow-fidelitys-lead-in-401k-bitcoin-offering/" target="_blank" rel="noreferrer noopener">told Blockworks</a> they had no plans to offer similar investment offerings.



Fidelity’s move into cryptocurrencies wasn’t a pandemic-born interest, unlike many other institutions. CEO Abigail Johnson reportedly held internal meetings about crypto and blockchain technology about a decade ago, and the firm eventually started mining bitcoin in <a href="https://www.fidelity.com/crypto/overview" target="_blank" rel="noreferrer noopener">2014</a>, according to its website. 



This article was updated at 8:50 am ET to include Fidelity&#8217;s response.



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brokerage

Fidelity Mulls Bitcoin Trading on All Brokerage Accounts: Report

<div id="highlights-block_620c55a8ea5c3" class="highlights">
 <ul>
 <li>The platform has signed a deal with crypto exchange BTC Markets to offer crypto investing</li>
 <li>It&#8217;s the first time in Australia&#8217;s history that a broker of its kind will offer crypto to its clients</li>
 </ul>
 
</div>



Online Australian platform SelfWealth is expected to become the country&#8217;s first traditional stockbroker to offer cryptocurrencies to domestic clients.



According to a press release on Tuesday, the platform has signed a deal with one of the country&#8217;s longest-running crypto exchanges, BTC Markets, in a bid to open doors for SelfWealth clients to hold digital assets under one roof.



&#8220;Currently, moving between popular investment types usually requires access to multiple trading platforms and for investors to move money multiple times,&#8221; said SelfWealth CEO Cath Whitaker. &#8220;We wanted to make investing in cryptocurrency as seamless as possible.”



SelfWealth customers will be able to trade five cryptos, pending approval from financial watchdog AUSTRAC, though the specifics on which assets will be selected have not yet been disclosed.



&#8220;While the interface is going to be different, it’s still going through the exchange so no logistical or system difference,&#8221; BTC Markets CEO Caroline Bowler&nbsp;told Blockworks. &#8220;If you already have a SelfWealth account, you don&#8217;t need to set up a new BTC Markets account&#8230;that keeps all crypto, ASX, US and soon-to-be Singapore securities in one place.&#8221;



SelfWealth, an 11-year-old fintech, is Australia’s fourth-largest online brokerage platform with close to 120,000 active&nbsp;members and $8 billion in assets under management, according to the release.



The move extends upon SelfWealth&#8217;s seven-month search for a viable exchange partner which had scheduled to begin offering crypto to its customers by the end of last year. The broker said it decided to pursue crypto after it discovered more than 30% of its members were already trading in digital assets.



The island nation, which currently houses 800,000 crypto investors, is expected to introduce a new <a href="https://cms.blockworks.co/australia-set-to-overhaul-payments-legislation-creating-licensing-regime-for-crypto/" target="_blank" rel="noreferrer noopener">regulatory framework</a> this year for payments that will focus on creating a licensing regime for digital assets.



Earlier this month, the country gifted a grant to tax accountant Kova Tax for the development of its crypto tax reporting platform, <a href="https://cms.blockworks.co/australia-grants-277k-for-crypto-tax-reporting-software-in-country-first/" target="_blank" rel="noreferrer noopener">marking another first</a> as Australia begins to quicken the pace in crypto adoption, regulation and education.



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Australian Broker SelfWealth Taps BTC Markets To Offer Crypto in Country First

<div id="highlights-block_61f3597f9ffdf" class="highlights">
 <ul>
 <li>The brokerage went for IPO in July 2021 with an opening at a price of $38</li>
 <li>The stock trading app&#8217;s shares fell roughly 15% in after hours trading before recovering slightly </li>
 </ul>
 
</div>





Stock trading platform Robinhood reported a 2021 full-year net loss of $3.69 billion on Thursday.



The platform also reported a $423 million net loss for Q4 or $0.49 per diluted share, compared with a net income of $13&nbsp;million from the fourth quarter in 2020, according to its latest <a href="https://investors.robinhood.com/news/news-details/2022/Robinhood-Reports-Fourth-Quarter-and-Full-Year-2021-Results/default.aspx" target="_blank" rel="noreferrer noopener">earnings report</a>.



Robinhood shares (HOOD) fell 15% in after-hours trading to a low of $9.77 before recovering slightly to around $10.12.



While Robinhood reported crypto-based revenue for the quarter had increased 304% to $48&nbsp;million, compared to $12&nbsp;million in the fourth quarter of 2020, its revenue from that activity is down $3 million to $48 million from <a href="https://s28.q4cdn.com/948876185/files/doc_financials/2021/q3/Q3-2021-Press-Release.pdf" target="_blank" rel="noreferrer noopener">Q3, 2021 earnings</a> of around $51 million.



That&#8217;s a far cry from its record posting of <a href="https://s28.q4cdn.com/948876185/files/doc_financials/2021/q2/Q2-2021-Press-Release-(1).pdf" target="_blank" rel="noreferrer noopener">$233 million in Q2, 2021</a> and shows a declining trend for that side of its business to turn a profit. Still, the company&#8217;s CEO, Vlad Tenev, was upbeat and pointed to ongoing development.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We had a momentous year, nearly doubling the number of customers on the platform and making critical investments in our team and infrastructure to support growth,” said Vlad Tenev, CEO and Co-Founder of Robinhood Markets in the report.</blockquote>



Indeed, improvements in trading infrastructure as well as the release of a Beta version of its <a href="https://cms.blockworks.co/robinhood-deploys-beta-crypto-wallets-allowing-select-customers-to-transfer-off-platform/" target="_blank" rel="noreferrer noopener">crypto WenWallets</a>, which went live to select customers last week, may yet prove decisive in squaring off company losses as it heads into its fourth innings as a publicly listed entity.



The brokerage went for IPO in July 2021 with an opening at a price of $38. 



The company&#8217;s battle to go public was not straightforward. In June 2021, FINRA fined the company <a href="https://cms.blockworks.co/robinhood-has-80-billion-in-assets-ipo-filing-reveals/" target="_blank" rel="noreferrer noopener">$70 million</a> for its systemwide outages and misleading customers. The SEC fined Robinhood <a href="https://www.cbsnews.com/news/robinhood-sec-fine-65-million/" target="_blank" rel="noreferrer noopener">$65 million</a> for similar offenses in December 2020. 



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Robinhood Reports 2021 Net Loss of $3.69B While Crypto Activity Falters

Sam Reynolds

<div id="highlights-block_61155a9708186" class="highlights">
 <ul>
 <li>DBS’ brokerage has received approval ‘in principle’ from Singapore’s financial regulator to offer its clients digital assets and tokens </li>
 <li>This would mean that the bank can offer its digital products from its digital asset exchange to its traditional brokerage clients </li>
 </ul>
 
</div>



Institutional and high-net worth clients of Singapore’s <a href="https://www.dbsvonline.com/" target="_blank" rel="noreferrer noopener">DBS Vickers</a> brokerage, owned by DBS Bank, could soon be trading digital assets and tokens from the bank’s digital exchange, as DBS Vickers recently received approval “in principle” from the Monetary Authority of Singapore. 



Singapore licenses digital asset infrastructure providers under the “Payments Act”, which was modified in 2019 to include cryptocurrency service providers. When the approval is finalized, clients of DBS Vickers, a traditional financial brokerage, will be able to access the digital exchange’s products.&nbsp;



“We are pleased to have made steady progress on our digital asset ecosystem in the six months since we launched the DDEx last year, and this shows in our trading and custody activity,” Eng-Kwok Seat Moey, group head of capital markets at DBS, said in a statement. “This bodes well for our ability to provide integrated solutions across the digital asset value chain notably in the form of STOs, leveraging DBS’ expertise in deal origination to tokenization, listing, distribution, trading and custody. This will contribute to Singapore’s ambitions to be a digital asset hub in Asia.”



DBS also recently announced that it would be extending the trading hours for its digital asset exchange beyond the Asian workday.



Earlier this month during its earnings call DBS announced that its digital asset trading desk had closed over $100 million in revenue during its most recent quarter. Currently the bank has 400 clients trading on its platform and it says its targeting 1,000 next quarter.&nbsp;



DBS didn’t provide a timeline to when it expects approval.&nbsp;



The bank’s stock closed the Singapore Thursday trading day at SG $31 ($22.84).  



Want more investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.