Troubles are mounting for San Bankman-Fried, founder of cryptocurrency exchange FTX, as the U.S. Department of Justice (DoJ) seizes $400 million worth of Robinhood stock (NASDAQ: HOOD ).
The filing in New Jersey bankruptcy court shows that the Justice Department has seized 55,273,469 shares of Robinhood stock and another $20,746,713.67 from ED&F Man Capital Markets a holding company jointly controlled by SBF and Wang. As of this writing, each Robinhood share is trading at $8.50, and the combined value of the seized stock and cash is approximately $490 million.
According to the department, the seized assets are considered property and proceeds involved in violations of various criminal statutes, including wire fraud and money laundering. Last month, a grand jury in the Southern District of New York returned an indictment charging SBF with such crimes as well as eight counts of conspiracy to commit securities fraud, commodities fraud and campaign finance violations.
The U.S. Justice Department said last week that it intends to seize the shares — 90 percent held by Bankman-Fried and 10 percent by Wang. Attorneys for Bankman-Fried opposed the possible seizure at the time, saying it was "inappropriate" to automatically assume the shares had been purchased with illicit funds.
FTX’s bankruptcy attorney and new CEO, John Ray, testified before Congress last month that FTX commingled user assets with Alameda Research, which were used for margin trading. In an interview at the Dealbrook Summit in November, SBF claimed that he had only $100,000 left in his bank account a hint at his multibillion-dollar net worth before FTX collapsed.
Bankman-Fried was extradited from the Bahamas to the United States in December on the order of the U.S. Justice Department, but was later released on $250 million bond. He is being held in the Northern District of California pending trial and is barred from any new lines of credit until then.
FTX, now run by its new CEO John Ray III, asked a judge last month to freeze the stock. Sam Bankman-Fried is entirely opposed to the move, saying he needs some of those funds to cover his legal fees.
