The Financial Times reported that the troubled cryptocurrency lender BlockFi has filed a lawsuit against Sam Bankman-Fried’s Emergent Fidelity Technologies over Robinhood (HOOD) shares held by the company and pledged to BlockFi as collateral Tuesday.

BlockFi Seeks to Recover What it Owned.

The complaint filed in the United States Bankruptcy Court for the District of New Jersey comes less than a day after BlockFi officially started its voluntary Chapter 11 bankruptcy proceedings. The lender had revealed its utmost move during the restructuring process would be to recover all its debts held by third-party companies, particularly FTX and its associates.

BlockFi has now started its recovery process with a lawsuit against Emergent. The crypto lender said it signed an agreement with the SBF-owned company on November 9 to guarantee the payment obligations of an unnamed borrower by pledging certain “common stock” as security.

According to loan documents viewed by the Financial Times, the “common stock” refers to the 7.5 % stakes (HOOD) Bankman-Fried purchased from the digital assets trading company Robinhood earlier this year before FTX collapsed.

To save the exchange, the FTX founder tried to sell the Robinhood shares before the company’s downfall earlier this month despite entering into a collateral agreement with BlockFi, people familiar with the matter said.

Emergent Failed to Honour Its Deal With BlockFi

BlockFi is now seeking to enforce the terms of the agreement through the lawsuit to recover an unspecified amount of collateral.

The crypto lender claimed in the complaint that Emergent failed to honour its end of the deal despite written notice of default and acceleration.

“Emergent has defaulted on its obligations under the pledge agreement and failed to satisfy its obligations thereunder despite written notice of default and acceleration. As a result, BlockFi is entitled to enforce its rights as the first priority secured party in the collateral,” the complaint reads.

BlockFi, which currently has $256 million in cash, also mentioned brokerage firm ED&F Man Capital Markets (EDFM) in its legal suit against Emergent as the custodial agent of the pledged agreement between the companies earlier this month. The lender alleged that EDFM had refused to transfer the agreed collateral.

Meanwhile, the latest lawsuit against Emergent has opened up another chapter in the ongoing FTX saga. The complaint revealed that Alameda Research, one of the FTX affiliates, defaulted on $680 million of collateralised loans in early November.

Troubles started in Bankman-Fried’s crypto empire after Alameda disclosed its Q3 financial earnings report showing massive illiquid exposure to FTT, the native token of FTX.