In the latest chapter of the FTX bankruptcy saga, three separate groups have filed competing claims over the assets seized from Sam Bankman-Fried following his criminal conviction. This high-stakes tug-of-war highlights the complexities and controversies surrounding the distribution of the disgraced crypto mogul’s forfeited property.
The FTX Debtors’ Estate Steps Forward
The FTX debtors’ estate, led by John Ray III, Bankman-Fried’s replacement as CEO, has filed a claim on Friday to six categories of assets that government prosecutors have seized from the former FTX chief. These include funds at banks in the name of FTX-related entities, two private jets, Bankman-Fried and ex-FTX CFO Luk Wai Chan’s Silvergate bank accounts, political contributions, and the proceeds from the sale of Robinhood shares held by an FTX entity called Emergent Fidelity Technology Ltd.
The debtors’ estate asserts that these assets never belonged to Bankman-Fried in the first place, as they resulted from his criminal behavior. They argue that granting their claim would “benefit all the creditors and stakeholders in the Debtors’ Chapter 11 bankruptcy proceedings and FTX Digital’s liquidation in The Bahamas, including victims of Bankman-Fried’s crimes.”
1) Forfeited FTX Customer assets are derived from FTX customers Not from FTX and so is not the property of the FTX bankruptcy estate
2) Bankruptcy estate is dollarising at petition date unlike the MDL. MDL intend to return assets to owners: 1:1 basis pic.twitter.com/i2tg1JrSFG— Sunil (FTX Creditor Champion) (@sunil_trades) June 15, 2024
Competing Claims Over Robinhood Shares
However, two other groups have also filed claims over some of the seized assets. Emergent, the entity used to purchase the Robinhood shares, claims that it retains the title to those assets, including the proceeds from the shares that have already been seized and sold by the government.
Additionally, a class-action suit led by lawyers hired by the largest FTX creditor group has asserted claims to many of the forfeited assets, including the Robinhood shares, arguing that the funds should be returned to customers rather than the debtors’ estate.
Debtors’ Estate Disputes Competing Claims
The debtors’ estate has disputed the claims made by Emergent and the creditor-led class action, asserting that it’s in the best interest of creditors for the bankruptcy court to grant its claim. They state that they will continue to work with the government and other stakeholders to distribute the funds through a process that complies with applicable laws, furthers victim recovery, and minimizes administrative costs.
As the various parties await hearings to adjudicate the competing claims, the battle over Bankman-Fried’s forfeited assets continues to unfold, with the fate of the funds hanging in the balance.