SBF’s Lawsuit Intensifies: DoJ to Seize $460M Stake in Robinhood

On Tuesday, Sam Bankman-Fried, former CEO of FTX, proclaimed his innocence regarding the various counts of U.S. criminal charges brought against him. Bankman-Fried, accompanied by his lawyer Mark Cohen and Christian Everdell, appeared at a hearing in the U.S. District Court in New York City. Court filings allege that Bankman-Fried is facing charges of conspiracy to commit securities fraud, wire fraud, and market manipulation. 

Additionally, billions of dollars are missing from the FTX balance sheet, leading to accusations that Bankman-Fried misappropriated customers’ and investors’ money to fund risky Alameda businesses.

Will FTX Investors Get Justice?

The charges brought against Sam Bankman-Fried highlight the lack of clarity in crypto regulations and the need for financial institutions to adhere to higher standards. Despite its importance, this issue has been neglected by regulators for too long. The most pressing question is who will protect investors from predatory tokenomics and unclear regulations.

To the relief of FTX stakeholders, the US Department of Justice (DOJ) plans to seize approximately $460 million in Robinhood shares belonging to Bankman-Fried.

U.S. Attorney Seth Shapiro informed U.S. Bankruptcy Judge John Dorsey, who is overseeing the FTX bankruptcy proceedings, that the DOJ does not consider Robinhood’s 56 million shares worth an estimated $465 million to be part of the bankruptcy estate.

Legal experts believe that Bankman-Fried will face a long legal battle as a result. In addition, Caroline Ellison and Gary Wang have pleaded guilty to fraud charges and agreed to fully cooperate with government prosecutors against Bankman-Fried.

“It’s going to be a very tough task for Bankman-Fried to ultimately prevail at trial. And while Bankman-Fried could be hoping for leniency, he may end up with a more severe sentence than he originally bargained for,” Mark A. Kasten, a partner at law firm Buchanan Ingersoll & Rooney PC Counsel, noted.

Nonetheless, SBF has continued to maintain his stance that he is innocent, stating that he did not engage in any illegal activity and that the charges against him are unfounded. His legal counsel will continue to argue this position in court, but it appears unlikely that SBF will be able to escape the allegations unscathed.

The Securities and Exchange Commission (SEC) has also taken an interest in the case, with SBF facing potential civil charges from that agency as well. This is yet another reminder of how serious financial crimes are taken and serves to deter anyone from engaging in similar actions in the future.