Disgraced FTX Founder SBF Borrowed $550 Million from Alameda to Buy Robinhood Stock

As the case against FTX founder Sam Bankman-Fried proceeds further, shocking details have emerged recently. As per the latest court documents, the disgraced FTX founder had borrowed several hundred million dollars from sister group Alameda Research in order to purchase a stake in the popular zero-fee trading app Robinhood Markets (HOOD).

As per the affidavit provided to the Bahamian court ahead of his arrest, Sam Bankman-Fried said that he and FTX co-founder Gary Wang had borrowed a total of $546 million from Alameda Research via promissory notes, around April-May this year.

Later, they used this money to capitalise Emergent Fidelity Technologies Ltd. a shell corporation that purchased 7.6% stake in Robinhood in May 2022. The unveiling of the affidavit has brought a new twist in the tale with now three parties laying claims over the 56 million shares of Robinhood.

Crypto lender BlockFi, FTX Group and Bankman-Fried are now laying claims over this Robinhood (HOOD) stock which is now approximately more than $440 million.

Following the collapse of crypto exchange FTX last month, crypto lender BlockFi faced a major liquidity crisis and eventually ended filing up for Chapter 11 bankruptcy earlier this month. In the court documents, BlockFi has stated that it owes the rights to the Robinhood shares due to a deal done by Sam Bankman-Fried in early November.

As per BlockFi, Alameda Research had pledged the Robinhood stock as collateral against a loan taken out from BlockFi. All these things clearly suggest that SBF has made a mess out of FTX and Alameda Research complicating the recovery plan even further.

Crypto exchange FTX filed for bankruptcy last month and the contagion has spread to the entire crypto market affecting several projects and crypto firms. Apart from BlockFi, we have seen that crypto lenders like Genesis Global have been at the major receiving end of FTX’s collapse.

In another development, the criminal case against disgraced FTX founder Sam Bankman-Fried has been reassigned to U.S. Judge Lewis Kaplan replacing U.S. District Judge Ronnie Abrams. Abrams withdrew from the case since her husband is a partner at the law firm Davis Polk & Wardwell, which advised FTX in 2021.

In her filing last Friday, Abrams wrote: "My husband has had no involvement in any of these representations. Nonetheless, to avoid any possible conflict, or the appearance of one, the Court hereby recuses itself from this action."