At the FTX bankruptcy court hearing held on Wednesday, U.S. attorney Seth Shapiro said that the federal government is in the process of seizing 56 million Robinhood Markets (NASDAQ:HOOD) shares that are under dispute, Reuters reported. Shapiro told U.S. Bankruptcy Judge John Dorsey that the Department of Justice (DOJ) does not believe that these shares are crypto exchange FTX’s property.
FTX’s HOOD shares, Bank Accounts Seized
Disgraced former FTX CEO Sam Bankman-Fried took a loan of over $546 million from FTX’s affiliate trading firm, Alameda Research, to buy over a 7% stake in stock trading app Robinhood. Bankman-Fried made this purchase via a shell firm called Emergent Fidelity Technologies Ltd., in which he has a 90% stake and FTX co-founder Gary Wang holds the remaining 10%.
Bankrupt crypto lender BlockFi, FTX, Bankman-Fried, and liquidators in Antigua have all laid claim to the Robinhood shares. BlockFi has alleged that Bankman-Fried owed these Robinhood shares to the company due to a deal under which they were pledged as collateral against a loan taken from BlockFi by Alameda. Shapiro said that competing claims to the Robinhood shares could be addressed in a forfeiture proceeding.
Prosecutors have accused Bankman-Fried of “fraud of epic proportions,” alleging that he used customer deposits to support Alameda Research. Bankman-Fried pleaded not guilty to wire fraud and conspiracy counts but has admitted to risk-management failures at FTX. However, he said that he did not believe he was criminally liable.
Shapiro also informed the court that the prosecutors had seized the U.S. bank accounts related to FTX Digital Markets, FTX’s Bahamas-based subsidiary. As per court documents, the FTX accounts at Silvergate Bank (SI) and Farmington State Bank (Moonstone Bank) held about $143 million.
Is Robinhood a Buy or Hold?
Wall Street is sidelined on Robinhood Markets stock, with a Hold consensus rating based on three Buys, five Holds, and two Sells. The average HOOD stock price prediction of $13.28 implies nearly 59% upside potential. Shares have declined 47.7% over the past year.