Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

0:00
0:00

U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX

Seizure of funds comes as the prospect of FTX customers recovering billions in assets remains in limbo
Seth Shapiro, a Justice Department official, said at an FTX bankruptcy court hearing Wednesday that the federal government has seized or is in the process of seizing Robinhood shares whose ownership is disputed by FTX and BlockFi, a cryptocurrency lender that collapsed in late November. The Wall Street Journal previously reported that the dispute involves 56 million shares.

“We either believe these assets aren’t property of the bankruptcy estate,” or fall under some bankruptcy code exception, Mr. Shapiro told Judge John Dorsey on Wednesday in the U.S. Bankruptcy Court in Wilmington, Del.

Separately, Katharine Parker, a federal magistrate judge in New York, in December ordered the seizure of money that an FTX unit was keeping in accounts at Silvergate Capital Corp., according to a court filing Wednesday. An earlier court filing put the amount at about $93 million.

The Justice Department has accused FTX co-founder Sam Bankman-Fried of stealing billions of dollars of customer money. The U.S. attorney for the Southern District of New York said Tuesday that his office had formed an FTX task force, and that one of its goals is to trace and recover victim assets.

The Federal Bureau of Investigation has also filed an affidavit with a New York federal court in order to seize FTX funds.

Meanwhile, court-appointed liquidators in the Bahamas have been attempting to recover remaining funds inside bank accounts in the U.S., some of which have been frozen following the crypto exchange’s collapse. However, federal authorities have preempted some of that dispute and seized at least some of the disputed funds as their criminal probe of FTX and Mr. Bankman-Fried has widened.

The federal government’s entrance into a matrix of competing claims for control over FTX assets will likely complicate customers’ ability to recover their money, which has been out of reach since November.

FTX lawyer James Bromley said during Wednesday’s hearing that the seizures were ordered by the court in connection with the criminal case in the Southern District of New York involving Mr. Bankman-Fried. He pleaded not guilty to charges of fraud this week.

“The question as to the ownership of those Robinhood shares was an open question before the seizure took place,” Mr. Bromley said. “We wanted to make sure that it was clear the Robinhood shares that were being seized were being seized from accounts” that aren’t currently under the direct control of the bankrupt FTX.

Silvergate on Wednesday filed a copy of Judge Parker’s warrant that led to the seizure of FTX’s funds at the bank. The bank made the filing to a federal bankruptcy court in Delaware handling the insolvency of FTX Digital Markets, a Bahamas-based subsidiary of FTX that housed the company’s international exchange.

Bahamian regulators placed FTX Digital Markets into liquidation in November, just before FTX’s new chief executive, John J. Ray III, placed about 100 FTX subsidiaries under chapter 11 protection in the U.S.

FTX co-founder Sam Bankman-Fried has pleaded not guilty to criminal charges.Photo: Stephanie Keith/Bloomberg News
FTX Digital Markets’ liquidators, appointed by the Supreme Court of the Bahamas, had previously asked to transfer $93 million out of Silvergate and another roughly $50 million held at Moonstone Bank in Washington state into accounts they control.

“It would be irresponsible to leave significant U.S. assets (more than $140 million) in the hands of two small crypto banks,” the liquidators wrote last month. They pointed to Silvergate being the subject of at least four class-action lawsuits brought by FTX creditors and Silvergate shareholders since November.

Silvergate said that the liquidators could have asked for consensual access instead of attempting to obtain it through a court order. “Silvergate, having repeatedly confirmed that the accounts had been frozen, vigorously disputes the implications that the funds are, in any way, at risk of loss,” the bank wrote.

Authorities’ seizure of FTX funds raises questions about how, or if, customers can expect to recover their money locked on the crypto platform. Mr. Ray told Congress in December that FTX’s U.S. entity isn’t solvent, putting into doubt whether American customers can expect to see their funds returned. He also noted that FTX’s international customers’ funds were commingled with accounts belonging to Alameda Research, whose own losses on bad crypto bets total in the billions, he said.

“We believe we have rights with respect to those assets that can be dealt with later,” FTX’s Mr. Bromley said of the seized assets. “We are in alignment at the present time with the U.S. government and the law enforcement officials in taking these steps.”

Mr. Shapiro of the Justice Department said the government would file a notice of seizure so the court is aware of what has been seized by the U.S. government.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
×