Alameda Lent Sam Bankman-Fried $546 Million for Robinhood Stake

According to court papers, FTX founder Sam Bankman-Fried said that he and former executive Gary Wang borrowed more than $546 million from Alameda Research to buy almost 8% of Robinhood Markets Inc.

They got the money from a loan earlier this year. The deals were written down in a series of promissory notes, and they were described in an affidavit that came up in a dispute on Tuesday in a US bankruptcy court in New Jersey. The Robinhood stake, which is made up of about 56 million shares, is at the center of an ownership dispute that is happening in Antigua, New Jersey, and Delaware. In separate court cases, FTX, the bankrupt crypto lender BlockFi Inc., and a creditor of FTX are all trying to prove that they have a right to the shares.

Alameda Lent Sam Bankman-Fried $546 Million for Robinhood Stake
Alameda Lent Sam Bankman-Fried $546 Million for Robinhood Stake

BlockFi is suing the company that owns the Robinhood shares, Emergent Fidelity Technologies, for control of those shares, saying that they back a loan made to Alameda. Lawyers for FTX say that former Alameda CEO Caroline Ellison gave the shares to BlockFi right before FTX went out of business.

The main part of the fraud case against Bankman-Fried going on in Manhattan federal court is that Alameda borrowed money from FTX. It’s not clear if the money in question in the bankruptcy dispute came from FTX.

Bankman-Fried confirmed the loans in an affidavit that he gave to a judge in Antigua earlier this month. Emergent Fidelity is in the process of going bankrupt there. On Tuesday, lawyers for the company gave the affidavit to the bankruptcy judge for BlockFi. The Wall Street Journal had already written about the news.

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In his affidavit, Bankman-Fried said that the $546 million in loans from Alameda were “capitalized into” Emergent Fidelity. Emergent is owned 90% by Bankman-Fried and 10% by Wang. Based on the affidavit, the company then bought 56 million shares in Robinhood. Bankman-Fried first filed the affidavit on Dec. 12, the day he was arrested, at the Eastern Caribbean Supreme Court in Antigua. He was trying to take control of Emergent Fidelity from the people who had been put in charge by the court on the island.

After FTX went down last month, Bankman-Fried is in a lot of fights. This is just one of them. The 30-year-old is currently out on bail and living in California. Prosecutors in Manhattan charged him with running a fraud that took place over many years and cost customers billions of dollars.

The loan to Bankman-Fried and Wang was approved by Ellison, who agreed to plead guilty to fraud charges as part of a deal with federal prosecutors. The loan was signed off on by Ellison. Wang has also turned against Bankman-Fried and made a deal with the government.

Case number 22-19361 in the US Bankruptcy Court for the District of New Jersey is BlockFi Inc. v. Emergent Fidelity Technologies Ltd.

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