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BlockFi Sues SBF, Demands $575M Worth of Robinhood Stocks

According to the Financial Times, which cited loan documents it had seen, the cryptocurrency lender BlockFi, which had just filed for Chapter 11 bankruptcy protection, on the same day sued the Emergent Fidelity Technologies holding company of FTX founder Sam Bankman-Fried for Robinhood Markets (HOOD) shares held by the company and promised to BlockFi as collateral.

On November 9, BlockFi and Emergent Fidelity Technologies allegedly agreed to guarantee payment by an unidentified borrower, using an unidentified common stock as collateral, according to the complaint.

The Financial Times stated, based on legal correspondence, that FTX’s sibling company Alameda Research was the one who took the loan.

As per the report, two unnamed sources familiar with the situation, that despite signing into the collateral agreement with BlockFi, Bankman-Fried was still attempting to sell his Robinhood shares to generate money before FTX’s collapse.

BlockFi Declared Bankruptcy

It is important to note that on Monday, as a result of the FTX liquidity crisis, crypto lending company BlockFi has declared bankruptcy after its temporary suspension of withdrawals.

Having run into financial trouble, the crypto lending company sought Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of New Jersey on Monday, January 28.

The document states that BlockFi and its other eight subsidiaries are eligible for the coverage. Due to the lack of progress in the FTX bankruptcy procedures toward the recovery of investors, BlockFi remained apprehensive of its position after the FTX implosion. Rather, additional obligations to the tune of $3 billion have been discovered for its top 50 debtors.

After the FTX filed for bankruptcy in November, regulators have been looking closely at the exchange and its former CEO because its failure sent shockwaves through the industry. President Joe Biden is reportedly pushing for global Bitcoin and crypto rules. Christine Lagarde, chief of the European Central Bank (ECB), also underlined the need for stronger crypto rules in the EU.

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