The United States is seizing assets that are linked to bankrupt crypto exchange FTX.
The Wall Street Journal (WSJ) reported Wednesday (Jan. 4) that the federal government had seized or is in the midst of seizing disputed shares of Robinhood Markets, and that it had seized money that an FTX unit had in bank accounts at Silvergate Capital.
The Robinhood shares that were seized have been at the center of a dispute between FTX and bankrupt crypto lender BlockFi, both of which claim to own the shares, the report said.
The seizures amount to hundreds of millions of dollars in assets.
The question of ownership of the Robinhood shares became more complicated when FTX founder and former CEO Sam Bankman-Fried told a court before he was arrested in the Bahamas that he and FTX co-founder Gary Wang borrowed $546 million from Alameda Research to capitalize Emergent Fidelity Technologies, which later bought the shares.
Even before that report, the ownership of the 56 million shares was already in dispute, as they were being claimed by BlockFi, FTX Group and Bankman-Fried himself.
As Bloomberg reported Dec. 22, “The Robinhood shares played a prominent role in the run-up to FTX’s implosion. They were touted in a spreadsheet as being some of the crypto empire’s most valuable, liquid assets amid efforts to drum up rescue financing.”
The accounts at Silvergate Capital were ordered seized in December and were mentioned in a court filing released Wednesday, per the WSJ report.
Silvergate Capital was among the banks highlighted in a letter by U.S. Sens. Elizabeth Warren and Tina Smith in which they asked the heads of three federal agencies about the links between banks and crypto firms and how they assess the banking system’s exposure to crypto risks.
With the federal government claiming control over the assets, there remain many other claimants to them as well, including, in some cases, FTX customers, Silvergate shareholders and FTX Digital Markets’ liquidators who were appointed by the Supreme Court of the Bahamas, according to the Wednesday WSJ report.
The fate of both the Robinhood shares, which are currently worth $460 million, and the Silvergate bank accounts will eventually be determined at a court hearing, Bloomberg reported Wednesday.
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