According to the documents filed in the case, the former CEO of FTX, Sam Bankman-Fried, took out loans totaling hundreds of millions of dollars from Alameda Research in order to fuel his massive purchase of Robinhood shares. The disgraced crypto tycoon testified in court that loans from Alameda were used to buy a staggering 7.6% share in the stock broker & crypto exchange. Shortly before being detained in December, SBF confirmed the source of funding for his Robinhood stock scoop in a court affidavit.
SBF Buys Robinhood
The court affidavit further stated that Bankman-Fried and FTX co-founder Gary Wang together borrowed close to $600 million from FTX’s trading arm, Alameda, through promissory notes in April and May. The money was then used to fund Emergent Fidelity Technologies Ltd, a shell corporation that was used to carry forward the purchase of 7.6% stake in Robinhood.
The two set up Emergent Fidelity Technologies in Antigua to oversee their Robinhood investment. In the court filing, it was stated that Bankman-Fried had 90% ownership of Emergent while Gary had 10%.
In order to capitalize Emergent so that it could make the investment into Robinhood, Gary and I agreed to borrow funds from Alameda Research Ltd. Those funds were capitalized into Emergent and it used those funds to acquire the shares in Robinhood.
Read More: Is Shiba Inu Coin (SHIB) Finally Ready For The Big 2023 Rally?
Who Owns The Shares?
As previously reported on CoinGape, claim for ownership of Sam’s Robinhood was made by the troubled cryptocurrency lender BlockFi which also filed for bankuptcy this year. In order to protect the interests of creditors, debtors, and claimants, the attorneys for the bankrupt exchange sought a judge to place a freeze on the assets. The affidavit allegedly corroborates the claims made by the CFTC and SEC that Alameda had provided loans to top executives and individual members of Bankman-Fried’s defunct cryptocurrency company.
Alameda Research allegedly stole customer funds from FTX before the trading behemoth entered insolvency in May 2022, according to the CFTC’s lawsuit.
Prior to his detention in the Bahamas and subsequent extradition to the United States, Bankman-Fried denied accusations of criminal negligence. However, in a plea agreement, Alameda CEO Caroline Ellison admitted to taking customer money from SBF’s FTX crypto exchange and sending it to her trading company.
Also Read: XRP Price Flashes “Sell Signal” As SEC vs Ripple Verdict Comes Close