The collateral was used to guarantee to the failed crypto lender the loan to FTX that was used to bail out BlockFi itself
Bankrupt cryptocurrency lender BlockFi has taken legal action against Sam Bankman-Fried, the disgraced founder of the failed FTX exchange, over the latter’s stake in prominent financial services company Robinhood, the Financial Times reports.
The shares were allegedly pledged to BlockFi as collateral after FTX entered into an agreement with BlockFi.
Bankman-Fried bought a 7.6% stake in the brokerage firm earlier this year, making its shares jump by more than 25%.
In June, Bloomberg reported that FTX planned to fully acquire Robinhood. However, Bankman-Fried denied that such a deal was in the making.
After FTX started its rapid downfall, Bankman-Fried reportedly hurried to sell his Robinhood stake. In fact, he was privately negotiating via the Signal messaging app the day before FTX Group filed for bankruptcy on Nov. 11.
After getting hit hard by the Terra-induced crypto crash in May, BlockFi decided to tie its fate to FTX Group by reaching a deal with the exchange’s U.S. subsidiary. FTX.US agreed to acquire BlockFi for up to $240 million. The exchange also agreed to provide the troubled lender with a generous line of credit.
After FTX itself went into flames earlier this November, BlockFi was forced to abruptly halt withdrawals.
On Monday, the crypto lender eventually filed for bankruptcy protection. It has up to $10 billion in liabilities and estimated assets.
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