BlockFi Sues a Bankman-Fried Company to Recover Robinhood Shares

Cryptocurrency lender BlockFi Inc has sued a holding company for FTX founder Sam Bankman-Fried, seeking to recover shares in Robinhood Markets Inc pledged as collateral three weeks ago, before BlockFi and FTX filed for bankruptcy protection.

BlockFi in a complaint filed on Monday in New Jersey bankruptcy court said Emergent Fidelity Technologies Ltd has defaulted on its obligations under a Nov. 9 pledge agreement.

Bankman-Fried owned about 56.2 million shares or 7.6% of Robinhood Class A common stock, according to a document filed with the Securities and Exchange Commission.

Now those Robinhood shares are at the center of a lawsuit filed by BlockFi in the hours after the lender petitioned for bankruptcy protection in the very same New Jersey court, documents show.

Named in the suit are Bankman-Fried’s Emergent Fidelity Technologies, and ED&F Man Capital Markets, which allegedly failed to properly broker the pledged assets in question, according to The Block.

After Emergent entered a state of default with BlockFi, the lender sought to take custody of collateral shares of Robinhood as per the forbearance terms of the agreement, however, “EDFM has refused to transfer the collateral to BlockFi,” the complaint said.