Sam Bankman-Fried borrowed $546 million from Alameda to buy Robinhood shares

The trial against the former billionaire keeps revealing more scandals.
Loukia Papadopoulos
Sam Bankman-Fried being escorted in handcuffs
Sam Bankman-Fried being escorted in handcuffs

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Sam Bankman-Fried has revealed he and former executive Gary Wang borrowed more than U.S. $546 million from their his trading and investment firm Alameda Research to purchase a nearly 8 percent stake in Robinhood Markets, according to court documents released on Tuesday.

The transactions, that were made earlier this year, were documented in a series of promissory notes in an affidavit provided to a Caribbean court before Bankman-Fried’s arrest.

Fighting for ownership- who will win?

The newly discovered stake, which consists of about 56 million shares, is the main focus of a multi-jurisdictional ownership fight currently taking place out in Antigua, New Jersey and Delaware. FTX, BlockFi Inc and an individual FTX creditor are all attempting to establish claims to the shares.

Currently, Emergent Fidelity Technologies owns the Robinhood shares but BlockFi is suing for control of its shares, claiming they back a loan made to Alameda. To date, it still remains unclear if the funds at issue in the bankruptcy dispute originated with FTX.

In an affidavit submitted to a judge in Antigua earlier this month, Bankman-Fried said the US$546 million in loans from Alameda were “capitalized into” Emergent Fidelity. This means that Bankman-Fried owns a whopping 90 percent of Emergent while Wang owns the remaining 10 percent.

The original affidavit was filed in the Eastern Caribbean Supreme Court in Antigua on December 12, the day of Bankman-Fried’s notorious  arrest. It now consists of one of many battles the disgraced executive is dealing with following the collapse of FTX last month. Manhattan prosecutors have charged the 30 year-old  with spearheading  a years-long fraud that put at risk billions of dollars of customer funds.

He faces steep prison time and high monetary fees especially considering that his former partner Wang has also flipped on him and cut a deal with prosecutors. 

Just two days ago, prosecutors of the Commodities Futures Trading Commission (CFTC) alleged that FTX's executives hid $8 billion in liabilities in fake customer accounts. Investigators claim that Bankman-Fried himself directed FTX executives to move Alameda's total of $8 billion in liabilities to an unknown customer account on the crypto exchange's system.

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A significant fall from grace

For Bankman Fried the allegations that keep coming to the surface mark a steep fall from grace. Bankman-Fried’s FTX was previously the world's second-largest crypto exchange before a liquidity crunch pushed the company into bankruptcy, evaporating the entrepreneur's $16 billion fortune in a week. Initially, Bankamn-Friend attempted to argue that his company was just facing trouble due to conditions created by competitors.

But as irregularities in FTX's accounts began coming to the forefront, the former successful executive was later arrested in the Bahamas. He is now on bail and living in California as he awaits the outcome of his trial.

So far, it has come to the surface that Alameda Research borrowed billions of dollars from FTX to invest in multiple deals and trades. These investments did not end well and further investigation revealed that the money came from FTX customer deposits.

 

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