BlockFi is suing Sam Bankman-Fried over Robinhood stock
The lawsuit against the FTX founder comes at a time when another crypto company has filed for bankruptcy protection

Bankrupt cryptocurrency lender BlockFi is suing Sam Bankman-Fried to seize shares of Robinhood that the FTX founder allegedly pledged as collateral just days before his exchange collapsed.
The lawsuit was filed Monday, just hours after BlockFi filed for bankruptcy protection after experiencing a "severe liquidity squeeze" from the collapse of Bankman-Fried's exchange FTX.
BlockFi's lawsuit, filed in the same New Jersey court where the bankruptcy proceedings were initiated, targeted Bankman-Fried's vehicle Emergent Fidelity Technologies and sought unspecified collateral.
The collateral is Bankman Fried's stake in Robinhood, the online trading company, according to loan documents obtained by the Financial Times. He had bought 7.6 percent of Robinhood earlier in the year.
The dispute underscores the close connection between crypto companies and the chaotic unraveling process that is now beginning as bankruptcy attorneys sift through the wreckage of FTX and other companies hit by the collapse.
The industry has seen a string of bankruptcies this year as crypto markets have been gripped by a major crisis of confidence that has pushed tokens like Bitcoin and Ethereum to their lowest prices since 2020.
Bankman-Fried had stylized himself as the savior for failing crypto companies in June, providing BlockFi with emergency funding that gave it the option to buy the lender at a bargain price.
On Monday, however, BlockFi said Bankman-Fried's involvement ultimately killed it, as its trading firm Alameda Research defaulted on $680 million in secured loans earlier in November.
BlockFi's lawsuit alleges that around the same time, on Nov. 9, the company and Emergent entered into an agreement to guarantee the payment obligations of an unnamed borrower by pledging certain "common stock" as collateral. Legal correspondence accompanying the case identifies the borrower as Alameda.
The dispute is a sign of the intense pressure on Bankman-Fried, whose paper fortune vanished almost overnight with the collapse of his $32 billion FTX empire. Authorities in the US and the Bahamas, where FTX was headquartered, have launched investigations.
In the days leading up to FTX's Nov. 11 bankruptcy filing, Bankman-Fried had rushed to raise billions of dollars in new funding. Spreadsheets he shared with investors listed his Robinhood shares as an asset.
In early November, the FT reported that Bankman-Fried had privately attempted to sell Robinhood stock via secure messaging app Signal in the days leading up to FTX filing for bankruptcy on Nov. 11.
According to two people familiar with the matter, Bankman-Fried continued to negotiate the sale of his Robinhood shares even after the pledge agreement was completed.
Bankman-Fried was still negotiating the sale as late as the evening of November 10, according to news reports.
BlockFi also named ED&F Man Capital Markets as Emergent's broker in the lawsuit, alleging that the London-based broker "refused to transfer the collateral to BlockFi."
Correspondence filed with the lawsuit indicates that ED&F Man refused to transfer the securities "without a bankruptcy court order" in the Delaware FTX filing.
BlockFi and Bankman-Fried did not immediately respond to requests for comment. ED&F Man declined to comment beyond the correspondence contained in the files.
