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Bankrupt crypto exchange FTX has filed a motion seeking approval to pay $14 million to fund Emergent Fidelity Technologies, an Antigua-based investment firm co-founded by Sam Bankman-Fried. The payment aims to address Emergent’s claims over Robinhood (NASDAQ:HOOD) shares valued at over $600 million.
What Happened: In a motion filed last Friday by FTX’s CEO, John Ray III, the company expressed its intention to cover Emergent's administrative expenses.
This move is aimed at avoiding the potential costs and delays of legal battles related to the firm's claims over approximately 55 million seized Robinhood shares, along with other cash assets.
According to Ray, this settlement would also resolve Emergent's Chapter 11 bankruptcy case in Antigua.
"Pursuant to the settlement, Emergent and the Joint Liquidators have agreed to assign to the FTX Debtors all of their rights (if any) with respect to the Robinhood Proceeds and Seized Cash held by the U.S. Department of Justice and otherwise cooperate to facilitate the release to the FTX Debtors of the Robinhood Proceeds and Seized Cash," Ray stated in his declaration.
FTX views this settlement as a significant step toward its reorganization efforts.
The company aims to maximize the repayment value for its creditors as part of its broader recovery plan.
The court is expected to review this motion on October 22.
Emergent purchased the Robinhood shares in May 2022.
Following the collapse of FTX and Alameda Research in November 2022, various entities, including FTX, Bankman-Fried and BlockFi, laid claim to the seized shares.
The U.S. Department of Justice took control of these shares and liquidated them in September, with Robinhood repurchasing the shares for approximately $606 million.
Why It Matters: The legal wrangling surrounding FTX and Alameda continues.
Last month, a U.S. judge approved a $12.7 billion settlement involving FTX, Alameda, and the Commodity Futures Trading Commission (CFTC).
Under the terms of the agreement, the CFTC agreed to forgo any claims as long as FTX remained aligned with its reorganization plan.
Bankman-Fried, who co-founded FTX, was convicted in November 2023 on seven criminal charges, including wire fraud and conspiracy to commit wire fraud.
He was sentenced to nearly 25 years in prison.
The U.S. Securities and Exchange Commission (SEC) has also charged him with fraud in connection to the collapse of FTX.
As the cryptocurrency industry navigates ongoing legal and regulatory challenges, events like Benzinga's Future of Digital Assets event on Nov. 19 will offer insights into how the digital finance landscape is evolving, particularly in light of the high-profile cases like FTX.
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Posted In: HOOD
