In a filing submitted on December 22, 2022, debtors from FTX Trading Ltd. and Alameda Research requested the U.S. Bankruptcy Court to freeze 56 million shares of Robinhood Markets Inc. (HOOD) currently held by Emergent Fidelity Technologies, a subsidiary owned by former FTX CEO Sam Bankman-Fried (SBF). The Class A common stock, valued at approximately $450 million, is custodied at ED&F Man Capital Markets Inc. (EDFM) in New York, which does not contest ownership.
FTX Motion: Enforce an Automatic Stay
The debtors argue that multiple pre-petition creditors—including bankrupt crypto lender BlockFi, SBF, and creditor Yonathan Ben Shimon—are all attempting to claim the same shares. FTX insists the shares are estate property and should be frozen to prevent any single party from seizing them preemptively. “The fact that multiple prepetition creditors of different Debtors and Mr. Bankman-Fried are all seeking to obtain possession of the Robinhood Shares demonstrates that the asset should be frozen until this Court can resolve the issues in a manner that is fair to all creditors,” the filing states.
The motion asks the court to enforce an automatic stay against any claims, ensuring that all parties have equal footing. FTX further noted that once a full evidentiary record is developed, it will conclusively prove the shares belong to the debtors’ estate.
Alameda’s Former CEO Attempted OTC Sale, Then Pledged to BlockFi
The filing reveals that Alameda’s former CEO, Caroline Ellison, nearly sold the Robinhood shares in an over-the-counter (OTC) deal before the bankruptcy. Later, Ellison pledged the shares to BlockFi as collateral for Alameda’s debts, in an effort to rescue the troubled lender from default. BlockFi CEO Zac Prince accepted the pledge, making BlockFi a key claimant for the shares.
FTX debtors challenge the legitimacy of that pledge, arguing it may constitute a preferential or fraudulent transfer occurring shortly before the Chapter 11 filings. The court document details that Ellison’s actions were part of a broader attempt to stabilize Alameda’s financial position, but ultimately failed.
A Tangled Web of Competing Claims
Beyond BlockFi, SBF himself asserts ownership of the shares, and creditor Yonathan Ben Shimon has also filed claims. The overlapping demands create a complex legal scenario. FTX’s motion emphasizes that without a freeze, aggressive creditors could obtain the shares ahead of others, undermining the bankruptcy process.
The U.S. Bankruptcy Court has yet to rule on the motion. Observers expect significant resistance from BlockFi and potentially SBF, given the high stakes. The case illustrates the fragmented asset recovery efforts following FTX’s collapse, with more than $450 million in Robinhood stock at the center of the dispute. A decision is likely to set a precedent for how similar contested assets are handled in multi-jurisdictional bankruptcy proceedings.