Bankrupt BlockFi appeals court decisions in FTX case
2023.02.20 10:38
Bankrupt BlockFi appeals court decisions in FTX case
By Tiffany Smith
Budrigannews.com – The FTX scandal and Sam Bankman Fried, its founder and former CEO, continue to have repercussions.
On February 17, it was reported that the crypto lender BlockFi Inc. had filed an appeal with the United States Bankruptcy Court in Wilmington, Delaware, seeking to remove SBF’s offshore investment vehicle from the Chapter 11 bankruptcy protections.
The founder of FTX used Emergent Fidelity Technologies Ltd. to acquire a 7.6% stake in Robinhood Markets Inc. According to BlockFi’s motion, Emergent Fidelity’s bankruptcy status serves little purpose and was filed to undermine BlockFi’s claim to Robinhood shares.
But Emergent’s liquidators, Quantuma, a financial adviser, said the bankruptcy was filed to protect the rights of its creditors, “whoever they may be.”
Toni Shukla, director of Quantuma, stated that numerous parties claiming to be creditors or “outright owners” of Emergent’s assets in various U.S. lawsuits include:
“The [liquidators’] belief is that Chapter 11 protection is the only practical way to enable Emergent to defend itself, its assets, and the interests of its creditors in the United States,”
Shukla made it clear in an affidavit that Emergent does not have any significant assets other than the shares and that prosecutors have seized $20.7 million in cash. She stated that BlockFi’s claim that the bankruptcy was filed in order to collect fees is “wrong, and without basis.”
Robinhood has commented, stating that although it is uncertain whether it will be able to do so, it would like to purchase the shares back.
BlockFi has been insolvent since November 28, 2022, when it filed for Chapter 11 bankruptcy as a result of the FTX collapse’s spread.
In December, FTX appealed to the bankruptcy judge to prevent BlockFi from claiming SBF’s nearly $450 million purchase of Robinhood shares.
While the courts deliberate over who should own the Robinhood shares BlockFi and FTX claimed, the judge considered moving the shares to an escrow account or a neutral broker.
