Numerous Claims Arise for Seized Assets of Former FTX CEO Bankman-Fried
Ruholamin Haqshanas
In the ongoing bankruptcy proceedings of FTX, three distinct groups have recently lodged claims regarding the assets confiscated from Sam Bankman-Fried following his criminal conviction.
The debtors’ estate of FTX, headed by John Ray III, who took over as CEO after Bankman-Fried, submitted a claim on Friday, asserting its ownership of six categories of assets seized by government prosecutors.
These assets encompass funds held in the name of FTX-related entities at various banks, two private jets, funds held by Bankman-Fried and former FTX CFO Luk Wai Chan at Silvergate bank, political contributions made by Bankman-Fried and other FTX executives, and the proceeds from the sale of Robinhood shares held by an FTX entity known as Emergent Fidelity Technology Ltd (“Emergent”).
The debtors’ estate argues that these assets were never owned by Bankman-Fried as they were obtained through illegal activities. They maintain that all these specific assets were held in the name of FTX Digital or a debtor entity and were financed by debtor assets.
Granting their claim over the assets, according to the debtors’ estate, would benefit all creditors and stakeholders in the bankruptcy proceedings, including victims of Bankman-Fried’s crimes.
However, two other claims have been filed over some of the assets, creating complications.
Emergent Claims Ownership of Robinhood Shares
Emergent and its liquidators assert that Emergent still holds the ownership of the Robinhood shares and the proceeds from their sale. They argue that Bankman-Fried never possessed the shares or the cash held by Emergent, despite having a stake in the entity.
Furthermore, attorneys representing FTX creditors in a class-action lawsuit in the Southern District of Florida have filed their own claims to several of the seized assets. They argue that the forfeited assets, including the Robinhood shares, funds from bank accounts, and seized crypto tokens, should be returned to the customers rather than the debtors’ estate.
The class-action lawsuit aims to distribute the assets as an in-kind distribution to creditors. The debtors’ estate was aware that Emergent would likely file a claim, and discussions have been held to explore a potential resolution.
The estate refutes Emergent’s claims of interest and will respond accordingly. The class-action lawsuit contends that returning the assets to the customers is in the best interest of the creditors, as it allows for a fair distribution.
It also raises concerns about conflicts of interest within the debtors’ estate that could compromise the equitable distribution of the assets.
Both the debtors’ estate and the attorneys representing creditors have requested hearings to adjudicate the claims, but specific dates have not been set yet.
SBF Receives 25-Year Prison Sentence
Sam Bankman-Fried, the founder of the now-defunct crypto exchange FTX, has been sentenced to 25 years in prison approximately five months after being found guilty on all seven counts related to fraud and money laundering during his trial.
Before the sentencing, the Department of Justice (DOJ) emphasized the devastating repercussions of FTX’s collapse, seeking a harsh 40 to 50-year prison term for the disgraced crypto leader.
