Why BlockFi Sues Former CEO of FTX Sam Bankman-Fried?!

The downward momentum caused by the fall of the FTX empire appears to be becoming progressively harmful. FTX was a $32 billion corporation before declaring bankruptcy on November 11 because to claims of a liquidity crisis, which caused customers to halt withdrawals. Several platforms were significantly damaged, including FTX-acquired firm BlockFi.

Read BlockFis bankruptcy reported by WikiFX: https://www.wikifx.com/en/newsdetail/202211299604347623.html.

It was announced that the platform was suing FTX's former CEO Sam Bankman-Fried after filing for Chapter 11 bankruptcy, specifically his holding company Emergent Fidelity Technologies.

BlockFi and Emergent Fidelity Technologies agreed on November 9 to guarantee the payment of an unnamed borrower by pledging anonymous common stocks, according to court records. According to the Financial Times, the borrower from BlockFi is Bankman-Alameda Fried's Research, and the stocks pledged are Robinhood (HOOD).

Bankman-Fried paid $648 million for a 7.6 percent investment in Robinhood earlier this year, prompting speculation that he would buy a controlling stake in the online broker. However, it was formally denied, with the statement that “no active” merger and acquisition conversations were taking place.

According to a filing with the US Securities and Exchange Commission, Bankman-Fried originally purchased his 7.6% share in consumer trading app Robinhood in May 2022, for around $600 million at the time.

The loan with HOOD as collateral was obtained just days before FTX's demise. According to the media, Bankman-Fried planned to sell his Robinhood stakes despite having collateralized them with BlockFi.

The complaint, made in the same New Jersey court where BlockFi filed for bankruptcy, claims that Bankman-Fried's “defaulted on its responsibilities under the pledge agreement” and “failed to discharge its obligations thereunder despite written notice of default and acceleration.”

According to the Financial Times, citing unidentified and unconfirmed sources, Bankman-Fried had been listed his interest in Robinhood among his assets as he made last-ditch efforts earlier this month to raise money from investors in order to preserve FTX.

BlockFi was not the only instance of Bankman-Fried promising huge sums to save other struggling companies during this year's crypto winter.

In August 2022, FTX offered to buy troubled crypto lender Voyager for $70 million, leaving the company scrambling to find a new buyer.

At presence, it seems like Binance is replacing FTX in the acquisition of Voyager – seen on WikiFX last week. Read here: https://www.wikifx.com/en/newsdetail/202211253974207470.html.

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