Bankrupt crypto lender BlockFi has filed a motion to dismiss the bankruptcy filing of Emergent Fidelity Technologies, the holding company owned by FTX founder and former CEO Sam Bankman-Fried (SBF).
In the movement, deposit In the United States Bankruptcy Court for the District of Delaware on Thursday, BlockFi argued that Emergent was ineligible to file for bankruptcy because it had no assets other than 56 million shares. Robinhood.
BlockFi seeks to dismiss Emergent bankruptcy case
Recall that Emergent deposit for voluntary Chapter 11 bankruptcy protection on February 5, nearly three months after FTX became insolvent.
The company, owned 90% by SBF and 10% by former FTX executive Gary Wang, had just $20.7 million in cash, 56 million Robinhood shares worth approximately $600 million and no other assets.
Robinhood’s involvement has been a bone of contention between SBF and BlockFi due to a loan relationship between the two parties. Shortly after filing for bankruptcy in November, BlockFi for follow-up SBF and Emergent on custody of Robinhood shares.
During the court hearing in December, the crypto lender explain that the shares were pledged as collateral in a $680 million loan deal with Emergent involving FTX sister company Alameda Research in November.
Although the issues are Currently in under the custody of the United States Department of Justice (DOJ), BlockFi insists that Emergent is ineligible for a bankruptcy filing.
“Neither law nor equity requires the performance of a futile act. But this bankruptcy case asks the Court to do just that – to “reorganize” an empty shell. Emergent has no employees, no income and no business; its only assets were shares of Robinhood Markets Inc. (the “Stocks”) worth hundreds of millions of dollars,” BlockFi said.
“An Ultimate Litigation Tactic”
Additionally, BlockFi argued that Emergent filed for bankruptcy as a “last resort litigation tactic” because it was not seeking to maximize the value of its assets or to preserve itself.
The troubled lender also insisted the bankruptcy filing only existed to enrich Emergent’s liquidators, who have already received $1.7 million in fees.
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