BlockFi appeals to cancel bankruptcy status for SBF’s offshore investment vehicle

The fallout from the FTX scandal, unleashed by its founder and former CEO Sam Bankman Freed, continues to emerge.

February 17 was reported that bankrupt crypto lender BlockFi Inc. filed an appeal in the United States Bankruptcy Court in Wilmington, Delaware, seeking to deprive the offshore investment firm SBF of Chapter 11 bankruptcy protection.

Emergent Fidelity Technologies Ltd. was used by the founder of FTX to purchase a 7.6% stake in Robinhood Markets Inc. According to BlockFi’s petition, Emergent Fidelity’s bankruptcy status makes little sense and was filed to undermine BlockFi’s own claim to Robinhood shares.

However, a spokesman for Quantuma’s financial advisor, Emergent’s liquidators, said the bankruptcy was filed to protect the rights of its creditors, “whoever they may be.”

Quantuma director Tony Shukla said that with many parties claiming to be the creditors or “full owners” of Emergent’s assets in various lawsuits taking place in the US:

“… [liquidators] believe that Chapter 11 protection is the only practical way to enable Emergent to protect itself, its assets, and the interests of its U.S. creditors.”

In an affidavit from Shukla, she explained that Emergent does not own any material assets other than shares, as well as $20.7 million in cash, which was confiscated by prosecutors. She said it is “incorrect and unfounded” for BlockFi to claim that the bankruptcy was filed for fees.

Robinhood commented on the situation, stating that it would like to buy back the shares, although it admitted that it was not sure if it could do so.

Judge Allows Sam Bankman-Freed’s Bail Bonds to Be Released

BlockFi has been bankrupt since November 28, 2022, when it filed for Chapter 11 bankruptcy due to the collapse of FTX earlier in the month.

Back in December, it was FTX that petitioned a bankruptcy judge to stop BlockFi from claiming nearly $450 million worth of Robinhood stock that was acquired by SBF.

The judge considered transferring the Robinhood shares, which are being claimed by BlockFi and FTX, to either a neutral broker or an escrow account while the courts decide on their rightful owner.

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