Multiple Claims Arise for Confiscated Assets of Former FTX CEO Bankman-Fried
In the ongoing bankruptcy proceedings of FTX, three distinct groups have recently submitted claims for the assets confiscated from Sam Bankman-Fried following his conviction. The debtors’ estate of FTX, headed by John Ray III, who took over as CEO from Bankman-Fried, filed a claim on Friday, asserting ownership of six categories of assets seized by government prosecutors.
These assets include funds held in banks under the names of FTX-related entities, two private jets, funds held by Bankman-Fried and former FTX CFO Luk Wai Chan at Silvergate bank, political contributions made by Bankman-Fried and other FTX executives, and the proceeds from the sale of Robinhood shares held by an FTX entity named Emergent Fidelity Technology Ltd (“Emergent”).
The debtors’ estate argues that these assets did not belong to Bankman-Fried as they were obtained through criminal means. They claim that all the specific properties were registered under FTX Digital or a debtor entity and were financed by debtor assets.
Granting their claim over the assets, according to the debtors’ estate, would benefit all creditors and stakeholders in the bankruptcy proceedings, including victims of Bankman-Fried’s crimes. However, two other claims have been filed over some of the assets, adding complexity to the situation.
Emergent Claims Ownership of Robinhood Shares
Emergent and its liquidators argue that Emergent still holds the ownership of the Robinhood shares and the proceeds from their sale. They contend that Bankman-Fried never owned the shares or the cash held by Emergent, despite having a stake in the entity. Furthermore, lawyers representing FTX creditors in a class-action lawsuit in the Southern District of Florida have submitted their own claims for several of the confiscated assets.
They argue that the forfeited assets, including the Robinhood shares, funds from bank accounts, and seized crypto tokens, should be returned to the customers rather than the debtors’ estate. The class-action lawsuit aims to distribute the assets as an in-kind distribution to creditors.
The debtors’ estate anticipated that Emergent would file a claim, and discussions have reportedly been held to explore a potential resolution. The estate disputes Emergent’s claims of ownership and will respond accordingly.
The class-action lawsuit argues that returning the assets to the customers is in the best interest of the creditors, as it allows for a fair distribution. It also raises concerns about conflicts of interest within the debtors’ estate that could impact the equitable distribution of the assets.
Both the debtors’ estate and the lawyers representing creditors have requested hearings to settle the claims, but specific dates have not been set yet.
SBF Receives 25-Year Prison Sentence
Sam Bankman-Fried, the founder of the now-defunct crypto exchange FTX, has been sentenced to 25 years in prison, approximately five months after being found guilty on all seven counts of fraud and money laundering during his trial. Before the sentencing, the Department of Justice (DOJ) emphasized the devastating impact of FTX’s collapse, seeking a severe 40 to 50-year prison term for the disgraced crypto executive.