Robinhood Faces Asset Seizure As DOJ Targets $466M In Shares Tied To Sam Bankman-Fried

Despite protests from the legal counsel for the discredited FTX co-founder, the U.S. Department of Justice (DOJ) formally seized the 55,273,469 shares of Robinhood Markets Inc HOOD — an 8% stake — linked to Sam Bankman-Fried and Gary Wang.

Prosecutors with the commercial litigation department of the Department of Justice (DOJ) Civil Division notified the bankruptcy court in the district of New Jersey in a document dated Jan. 6 that U.S. authorities took custody of Robinhood shares linked to the erstwhile crypto juggernaut, valued at more than $456 million.

Bankman-Fried's attorneys previously contended Emergent Fidelity Technologies, the vehicle used to buy the interest in Robinhood, was not connected to FTX's bankruptcy and shouldn't be included in the bankruptcy proceedings.

The former crypto-billionaire, according to lawyers, needs the shares to pay for his defense.

The seized assets did not belong in the bankruptcy, according to the DOJ complaint, and were instead involved in violations of the laws against wire fraud and money laundering.

Bankman-Fried claimed he and Wang borrowed money from the quantitative trading firm Alameda Research to finance Emergent Fidelity Technologies, which purchased the Robinhood shares, in an affidavit submitted to the Eastern Caribbean Supreme Court on Dec. 12.

Several FTX bankruptcy-affected parties are fighting for the right to recover their investment through the Robinhood stake.

These include FTX creditor Yonatan Ben Shimon, BlockFi, and Bankman-Fried.

Read Next: SEC Investigates Due Diligence Conducted By Investors In Bankrupt Crypto Exchange FTX

Photo: Christopher E. Zimmer via Shutterstock