• BlockFi has filed a motion to dismiss the bankruptcy case for Emergent Fidelity Technologies, owned by Sam Bankman-Fried.
• The company has no assets other than 56 million Robinhood shares worth roughly $600 million.
• BlockFi had sued SBF and Emergent over custody of the Robinhood stock.
BlockFi Files Motion to Dismiss Bankruptcy Case
BlockFi insists that Emergent Fidelity is not eligible for a bankruptcy case as it has no assets or property except the 56 million Robinhood shares. Bankrupt crypto lender BlockFi has filed a motion to dismiss the bankruptcy case for Emergent Fidelity Technologies, the holding firm owned by Sam Bankman-Fried (SBF), founder and former CEO of FTX.
Emergent Has No Assets Except Robinhood Shares
In the motion, filed on Thursday in the United States Bankruptcy Court for the District of Delaware, BlockFi argued that Emergent is not eligible for a bankruptcy case as it has no other assets than 56 million Robinhood shares. BlockFi Seeks to Dismiss Emergent’s Bankruptcy Case Recall that Emergent filed for voluntary Chapter 11 bankruptcy protection on February 5, almost three months after FTX became insolvent. The company, which is 90% owned by SBF and 10% by former FTX executive Gary Wang, had just $20.7 million in cash, 56 million Robinhood shares worth roughly $600 million, and no other assets.
Blockfi Sues SBF and Emergent Over Custody of Stock
The Robinhood stake has been a bone of contention between SBF and BlockFi due to a lending relationship between both parties. Shortly after filing for bankruptcy in November, BlockFi sued SBF and Emergent over custody of the Robinhood stock. During the court hearing in December, the crypto lender explained that the shares were pledged as collateral during a $680 million loan agreement with Emergent involving FTX’s sister firm Alamos Capital Management LLC (ACM).
Court Will Determine Who Gets Rights To Stock
The court will now decide whether BlockFI or ACM have rights to hold onto these stocks while they determine who will receive them ultimately. In its arguments before court this week, BlockFI asserted that since neither company owns any property apart from these stocks it should not be considered eligible under Chapter 11 proceedings which are meant only for companies with debt obligations exceeding their assets’ value which does not seem to be applicable here given how much money can be made off selling these stocks alone if necessary.
Conclusion
Therefore it remains unclear who will get rights to hold onto these stocks but regardless it seems unlikely that any creditors would walk away from this situation empty handed given how much money can be made off selling these stocks alone if necessary making this an interesting development indeed!