BlockFi has sued FTX founder Sam Bankman-Fried to reportedly recover shares in trading firm Robinhood.
The suit, filed in federal court in New Jersey, came on the heels of the company’s bankruptcy filing Monday (Nov. 28), a move stemming from a liquidity crisis caused by BlockFi’s exposure to the also-bankrupt FTX.
According to the suit, BlockFi is seeking unnamed collateral from Emergent Fidelity Technologies, a company owned by Bankman-Fried.
A report Tuesday (Nov. 29) by the Financial Times, citing loan documents seen by the news outlet, says the collateral in question is Bankman-Fried’s stake in Robinhood.
Bankman-Fried purchased a 7.6% stake in the company earlier this year, as PYMNTS has written, and was even said to be considering buying Robinhood outright.
That was before his company collapsed, taking BlockFi with it. BlockFi on Monday announced it was seeking bankruptcy protection following an earlier pause on activity on its side.
“Since the pause, our team has explored every strategic option and alternative available to us, and has remained laser-focused on our primary objective of doing the best we can for our clients,” the company said on its blog.
“These Chapter 11 cases will enable BlockFi to stabilize the business and provide BlockFi with the opportunity to consummate a reorganization plan that maximizes value for all stakeholders, including our valued clients.”
In a press release announcing the bankruptcy, the company said it will focus on recovering obligations owed to it, including those owed by FTX. Due to FTX’s own ongoing bankruptcy, BlockFi says it “expects that recoveries from FTX will be delayed.”
As PYMNTS wrote Monday, this has been a tumultuous year for BlockFi, which raised $350 million at a valuation of $3 billion in March 2021 with apparent designs on someday becoming a publicly-traded company.
However, the lender went through a “down round” during this year’s crypto winter, shedding $2 billion from its investor-projected valuation, and was eventually forced to cut almost 20% of its staff during the summer as cryptocurrency markets continued to fall.
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