The U.S. Department of Justice (DOJ) has officially seized shares of popular trading app Robinhood linked to Sam Bankman-Fried despite objections from the disgraced FTX founder’s legal team.
In a filing dated January 6th, prosecutors with the Commercial Litigation branch of the DOJ Civil Division inform the bankruptcy court in the district of New Jersey that Robinhood shares worth over $456 million tied to the former crypto titan are now in the custody of the US government.
“The United States has seized 55,273,469 shares of the stock of Robinhood Markets Inc. and $20,746,713.67 in United States currency from an account at ED&F Man Capital Markets Inc. pursuant to judicially authorized seizure warrants issued in the Southern District of New York.”
According to the filing, the seized assets constitute property involved in the violations of money laundering and wire fraud criminal statutes and are not properties of the bankruptcy estate.
In November, FTX filed for bankruptcy after the crypto exchange failed to meet withdrawal requests from its customers.
The DOJ’s seizure comes as Bankman-Fried deals with an eight-count indictment arising from his alleged misappropriation of billions worth of FTX customer funds.
In an affidavit filed with the Eastern Caribbean Supreme Court on December 12th, Bankman-Fried says he and FTX chief technology officer Gary Wang borrowed funds from FTX sister firm Alameda Research to fund Emergent Fidelity Technologies, which bought the Robinhood shares. Bankman-Fried owns 90% of the shell company.
Bankman-Fried’s lawyers argue that Emergent is not implicated in the insolvency of FTX and should not be part of the bankruptcy proceedings. They also say the former crypto billionaire needs the shares to fund his legal defense.
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