American entrepreneur Sam Bankman-Fried has failed to honor a loan agreement with BlockFi.
Troubled crypto lender BlockFi has sued the former CEO of the FTX exchange Sam Bankman-Fried (SBF). The lawsuit against Bankman-Fried, which was filed just a few hours after BlockFi filed for bankruptcy on Monday, is seeking to have SBF turn over the Robinhood shares of his Emergent Fidelity Technologies firm. According to a Financial Times report, the shares were initially pledged to BlockFi as collateral on November 9. However, so far, Emergent has reportedly failed to honor the payment agreement.
Fresh Lawsuit: Sam Bankman-Fried Embroiled in Suspected Foul Play
For clarity, Bankman-Fried acquired a 7.6% stake in the online brokerage firm Robinhood back in May. The Robinhood shares were worth approximately $648 million at the time and were acquired via SBF’s Emergent investment company. But, that is not exactly the issue on the ground.
Going into an agreement, Emergent Fidelity Technologies had assured BlockFi that an unidentified borrower will be paying off what was owed, pledging a common stock — also unnamed — as collateral.
But, according to the Financial Times report, court documents suggest that the borrower was none other than Bankman-Fried’s Alameda Research. The report also suggests that despite already being in a collateral agreement with BlockFi, Bankman-Fried continued to attempt to sell the Robinhood shares. This was as he kept looking for other ways to raise funds, prior to the recent FTX collapse.
BlockFi Files for Bankruptcy
As the blowout of FTX collapse continues to spread to every corner of the crypto space, BlockFi is the latest firm to declare how badly it was affected. The lender filed for bankruptcy on Monday, despite earlier claims that most of its assets were not exposed to FTX. But that was just at the beginning of the month. Later, BlockFi admitted that there was a “significant exposure” to the now-defunct exchange. According to its bankruptcy filing, it has assets worth somewhere between $1 billion to $10 billion on the exchange. It also claims to have liabilities in the same range, with well over 100,000 creditors to its name as well.
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