BlockFi recently requested the court to “dismiss” SBF’s bankruptcy filing for Emergent Fidelity Technologies Ltd.
In light of the FTX scandal involving its former CEO, Sam Bankman-Fried, BlockFi, bankrupt cryptocurrency lender, has requested the United States Bankruptcy Court in Wilmington, Delaware to dismiss Chapter 11 bankruptcy protections for Emergent Fidelity Technologies Ltd., the offshore investment vehicle of SBF.
According to BlockFi’s motion, Emergent Fidelity Technologies Ltd., which SBF used to purchase a 7.6% stake in Robinhood Markets Inc., filed for bankruptcy to undermine BlockFi’s claims to the Robinhood shares. In response, Emergent’s liquidator, financial adviser Quantuma, noted that the bankruptcy status was implemented to protect the rights of Emergent’s creditors.
Toni Shukla, a director at Quantuma, revealed that several parties claim to be creditors or outright owners of Emergent’s assets. She claimed that Chapter 11 protection is necessary for Emergent to safeguard its assets, defend itself, and protect its creditors’ interests in the United States.
Shukla clarified that apart from the Robinhood shares, Emergent holds no substantial assets. Moreover, she claimed that prosecutors seized $20.7 million in cash. She rebuffed BlockFi’s claim that the bankruptcy filing was motivated by fees. She called it “wrong and baseless.”
Robinhood expressed interest in buying back the shares, but the company is unsure if it can do so.
A Series of Unfortunate Events
The FTX scandal that resulted in the collapse of the cryptocurrency market earlier in November has affected many companies, including BlockFi. Consequently, BlockFi filed for Chapter 11 bankruptcy on November 28, 2022.
FTX filed an appeal in December to stop BlockFi from claiming ownership of Robinhood shares worth almost $450 million that SBF purchased. The judge presiding over the case considered transferring the shares claimed by BlockFi and FTX to a neutral broker or an escrow account while deciding their rightful owner.
Also read: FTX Asks Bankruptcy Judge To Stop BlockFi From Claiming Robinhood Shares
BlockFi’s request to eliminate the Chapter 11 bankruptcy protections for Emergent Fidelity Technologies Ltd. has become a contentious issue for all parties involved. BlockFi believes that the bankruptcy status is unnecessary. On the other hand, Quantuma’s liquidators insist that it is the only practical way to protect the rights of creditors.
The court will need to consider both sides of the argument carefully to ensure the protection of all stakeholders’ interests. As the case unfolds, the fate of the Robinhood shares hangs in the balance.
It remains unclear whether Robinhood will be able to repurchase the shares. Nevertheless, the ongoing legal battle may have significant implications for all parties. Many are eagerly waiting for the outcome of the case.