FTX Founder Sam Bankman-Fried Borrowed $546 Million From Alameda to Purchase Robinhood Stocks - Court Documents

Jace Dela Cruz, Tech Times 28 December 2022, 08:12 pm

According to court documents made available on Tuesday, Sam Bankman-Fried has admitted that he and former executive Gary Wang borrowed more than $546 million from Alameda Research to buy a share of about 8% in Robinhood Markets.

Bail Hearing Held For FTX Founder Sam Bankman-Fried

(Photo : Michael M. Santiago/Getty Images)
NEW YORK, NEW YORK - DECEMBER 22: FTX founder Sam Bankman-Fried leaves Manhattan Federal Court after his arraignment and bail hearings on December 22, 2022 in New York City.

Multi-Jurisdictional Ownership Dispute

Before Bankman-Fried's arrest, an affidavit was submitted to a Caribbean court detailing all the transactions, which were done earlier this year.

A multi-jurisdictional ownership dispute is now taking place in Delaware, New Jersey, and Antigua regarding the recently uncovered stake, which has roughly 56 million shares, reported first by Interesting Engineering.

There are three parties vying for ownership of the shares: FTX, BlockFi Inc., and a single FTX creditor.

The Robinhood shares are now owned by Emergent Fidelity Technologies, but BlockFi is appealing for ownership of those shares on the grounds that they are collateral for a loan given to Alameda.

It's still not known whether the money in the bankruptcy dispute came from FTX as of writing.

Bankman-Fried claimed in an affidavit that the US$546 million in loans from Alameda were financed into Emergent Fidelity, which was recently presented to a judge in Antigua this month.

This indicates that Wang holds the remaining 10% of Emergent while Bankman-Fried controls a whopping 90% of it.

The initial affidavit was submitted on December 12 to the Eastern Caribbean Supreme Court in Antigua, which is also the day of the former CEO's arrest.

FTX's Downfall

The 30-year-old has been accused by Manhattan prosecutors of leading a multi-year scheme that put billions of dollars in client funds at risk.

Given that his former partner Wang has also turned on him and reached a plea agreement with authorities, he faces a lengthy prison sentence and significant financial penalties.

According to recent allegations made by the Commodities Futures Trading Commission (CFTC), FTX management concealed $8 billion in liabilities in bogus client accounts.

Authorities assert that Bankman-Fried himself instructed FTX managers to transfer the $8 billion in liabilities owed by Alameda to an unidentified customer account on the company's system.

Executives at Alameda Research who pleaded guilty in court to fraud-related charges also alleged that the former CEO received billions of dollars in covert loans from the company.

FTX was formerly the second-largest cryptocurrency exchange in the world before a liquidity crisis forced the business into bankruptcy and wiped out the Bankman-Fried's $16 billion wealth in a matter of days.

Bankman-Fried claimed at first that his business was only having problems as a result of circumstances induced by rivals.

But the former CEO was later detained in the Bahamas when discrepancies in FTX's accounts started to surface. As he waits for the results of his trial, he is currently out on bail and residing in California.