• Sam Bankman-Fried’s lawyers have filed a motion to stop FTX debtors from controlling Robinhood shares worth $450 million.
• The legal team confirmed reports that the U.S. Department of Justice was in the process of seizing the shares, but said SBF was „compelled to reply“ given the stakes surrounding the assets.
• Bankman-Fried’s lawyers said he needs the funds to pay for his criminal defense, citing case law in which withholding funds could „constitute irreparable harm“ to one’s defense.
Sam Bankman-Fried, the former CEO of FTX, is facing a legal battle after his lawyers filed a motion on Jan. 5 in an effort to stop the exchange’s debtors from controlling more than $450 million worth of shares of Robinhood. The legal team confirmed the US Departure of Justice was in the process of seizing the Robinhood shares but said SBF was „compelled to reply“ given other claims.
The court filing argued that FTX debtors had „failed to carry their heavy burden“ establishing that they had a legal claim to more than 56 million Robinhood shares. The filing also cited U.S. authorities‘ criminal case against Bankman-Fried, in which he faces eight criminal counts, including wire fraud and violations of campaign finance laws.
Bankman-Fried’s lawyers argued that their client needs the funds to pay for his criminal defense. They cited case law in which withholding funds could „constitute irreparable harm“ to one’s defense. The lawyers contended that Bankman-Fried has not been found criminally or civilly liable for fraud, and it is improper for the FTX Debtors to ask the Court to simply assume that everything Bankman-Fried ever touched is presumptively fraudulent.
The filing argued that the FTX Debtors have not shown that they have a reasonable likelihood of succeeding on the merits of a fraudulent transfer claim. The lawyers noted that Bankman-Fried needs the funds to pay for his criminal defense and that withholding them could potentially cause irreparable harm.
The filing is the latest development in a complex legal battle that has been unfolding since Bankman-Fried was charged by U.S. authorities with eight criminal counts. The court will now decide whether the FTX debtors will be able to seize the Robinhood shares or if Bankman-Fried will get to keep them to pay for his legal defense.