Bankrupt crypto lender BlockFi has filed a lawsuit against Emergent Fidelity Technologies, a company owned by ex-FTX CEO Sam Bankman-Fried. Using this action, BlockFi seeks to take control of Bankman-Fried's investments at Robinhood.
In a previous agreement, Bankman-Fried had pledged his investments in Robinhood as collateral in the purchase of BlockFi. However, FTX's deal to acquire BlockFi fell through after the crypto exchange filed for bankruptcy on November 11.
By filing a lawsuit against Emergent Fidelity Technologies, BlockFi seeks to enforce the terms of their previous agreement. In the case of a favorable ruling, BlockFi stands a chance to receive over $500 million in shares.
This development comes after BlockFi filed voluntary cases under Chapter 11 of the U.S. Bankruptcy Code on November 28. In a tweet addressing the need to file for bankruptcy, BlockFi noted:
As part of our restructuring efforts, we will focus on recovering all obligations owed to BlockFi by counterparties, including FTX.
Keeping true to its statement, BlockFi filed its suit against Emergent Fidelity Technologies and Bankman-Fried on Nov 28, a few hours after filing for bankruptcy. Court papers were filed in the District of New Jersey of the United States Bankruptcy Court.
Documents in the filing indicate BlockFi demands Emergent turnover collateral under a pledge agreement signed on Nov. 9. In the Nov 9 pledge agreement, Emergent agreed to a payment schedule with BlockFi. However, the company has failed to honor its agreement which prompted the lawsuit.
BlockFi names the collateral as “including certain shares of common stock.”
