BlockFi sues Bankman-Fried in bid to scoop up Robinhood stake
Crypto lender BlockFi, which yesterday filed for bankruptcy, is suing the founder of collapsed crypto exchange FTX in a bid to claim Robinhood shares which were allegedly pledged as collateral, according to reports.
BlockFi yesterday revealed it had filed for Chapter 11 bankruptcy in New Jersey after suffering a liquidity crunch sparked by the failure of Sam Bankman-Fried’s FTX.
In separate court documents filed by the bankrupt lender, the firm revealed it is looking to scoop up Bankman-Fried’s 7.6 per cent stake in online trading firm Robinhood which he apparently pledged to the firm as collateral, the Financial Times reported.
The recovery attempt comes after BlockFi admitted yesterday in bankruptcy filings that its exposure to FTX had triggered its own collapse.
“With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the Company,” said Mark Renzi of Berkeley Research Group, BlockFi’s financial advisor, in a statement yesterday.
BlockFi had been rescued by Bankman-Fried’s firm earlier in the year with a $400m credit facility, and filings yesterday revealed the firm still owed $275m on a loan.
Bankman-Fried was regarded as a saviour for the sector at the time after swooping in with rescue packages to shore up ailing firms in the sector.
However, the efforts deepened ties between his now-failed empire and the rest of the ecosystem, which have fuelled concerns of contagion as firms collapse in its wake.