Former FTX CEO Sam Bankman-Fried’s legal team has filed a motion in an effort to bar debtors from the exchange from controlling more than $450 million worth of Robinhood stock.
In a January 5 court filing in connection with the FTX bankruptcy case, lBankman-Fried’s lawyers said the FTX debtors had “failed to discharge their heavy burden” by establishing that they had a legal right to more than 56 million Robinhood shares.. The legal team confirmed reports that the US Department of Justice was in the process of seizing the shares, but said SBF was “obliged to respond” given the stakes surrounding the assets.
“Mr. Bankman-Fried has not been held criminally or civilly liable for fraud, and it is improper for FTX’s debtors to ask the Court to simply assume that everything Mr. Bankman-Fried has ever touched is allegedly fraudulent.”the filing said, referring to Robinhood’s actions. “FTX’s debtors have not demonstrated that they have a reasonable probability of succeeding on the merits of a fraudulent transfer claim.”
The court filing cited the US authorities’ criminal case against Bankman-Fried, in which he faces eight criminal charges, including wire fraud and violations of campaign finance laws. According to his lawyers, SBF “requires part of these funds to pay for his criminal defense.” They cited case law according to which the withholding of funds could “constitute irreparable damage” for their defense.
Bankman-Fried claimed in December—before his arrest in the Bahamas and extradition to the United States—that he had only $100,000 left in his bank account.. However, two people whose personal details have been redacted from public documents have also signed as guarantors for his $250 million bail, along with his parents.
The former FTX CEO has pleaded not guilty to all charges and his trial is expected to begin in October. As a condition of his release on bail, a federal judge ordered Bankman-Fried not to access or transfer any cryptocurrency or FTX or Alameda assets. On-chain data had suggested that funds were being moved from Alameda’s wallets amid court cases.
Although the US Department of Justice could soon have control of all Robinhood shares, FTX, BlockFi and Bankman-Fried have previously filed separate lawsuits on different grounds. BlockFi filed a lawsuit in November alleging that the shares were put up as collateral for the company’s loans to Alameda Research, while FTX has argued that the shares should be controlled by the company while the bankruptcy case proceeds.
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