Gairika Mitra
FTX, the bankrupt cryptocurrency exchange, filed a motion last Friday seeking the Delaware Bankruptcy Court’s approval to pay Antigua-based investment firm Emergent Technologies $14 million to address the latter’s claims to over $600 million worth of Robinhood shares (HOOD).
The motion was filed by FTX CEO John Ray III, with the goal to cover potentially costly administrative fees and prevent any more expenses and recovery delays in relation to Emergent’s legal action over the more than 55 million HOOD shares in question.
Multiple parties like Emergent co-founder Sam Bankman-Fried, BlockFi, Bankman-Fried, and Emergent, had been contesting ownership of the shares. Emergent acquired approximately 56 million Robinhood stock in May 2022 through an arrangement with Bankman-Fried and Alameda Research, FTX’s sister trading firm.
After FTX collapsed in November 2022, the U.S. Department of Justice seized its shares in January 2023 on grounds of money laundering and wire fraud. Robinhood had then repurchased these shares in September 2023 for about $606 million.
SEC Warnings
The SEC had warned that it may challenge the repayment plan of the FTX in case it intends to return funds in stablecoins, as there are talks that the latter is exploring this option to repay its creditors.
On the other hand, several members of the crypto community reportedly see this move as a positive step toward FTX untangling its financial disputes. Crypto discussion platform Satoshi Talks (@Satoshi_Talks) called it as a “crucial” step.
#FTX has reached a deal regarding $600 million in #Robinhood shares, a crucial part of its ongoing bankruptcy proceedings.
— Satoshi Talks (@Satoshi_Talks) September 10, 2024
These shares have been at the center of multiple legal disputes, including claims from FTX founder Sam Bankman-Fried, creditors, and other parties.
Sam Bankman-Fried formed FTX in 2019 and saw it rise to prominence quickly, so its downfall in 2022 shook the crypto space. The firm started receiving backlash after revelations about improper financial transactions between FTX and Alameda Research surfaced. It was also accused of misusing customer funds, allegedly funneling billions of dollars into Alameda. These investments later soured, leaving customers unable to withdraw funds, followed by a bankruptcy filing.
As of this writing, FTX is said to still owe a huge amount of money to its customers. Bankman-Fried reportedly tendered his resignation from the CEO role soon after the bankruptcy announcement. He currently faces multiple charges, including fraud and money laundering.
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Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
