FTX’s SBF Assets Seized by the US Federals for $700 Million
Sam Bankman-Fried, the Chief Executive Officer and owner of the defunct Cryptocurrency exchange FTX, has had $697 million in assets frozen by U.S. federal authorities. Three of the frozen accounts, under the FTX Digital Markets moniker at the failing Silvergate Bank, allegedly had more than $6 million. Around January 11, 2023, the platform’s assets were taken over by authorities. In the 4th quarter of 2022, when customer anxiety over Crypto-related companies peaked in the wake of the FTX collapse, Silvergate saw a precipitous decline in its deposits of about 70%.
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More than 55 million Robinhood shares, with an estimated value of $525 million, are included in the sale. These shares were purchased by Bankman-Fried, FTX Group, and BlockFi using funds borrowed from Alameda and were the source of much contention between the three companies. In addition, the government is taking steps to seize $171 million in cash from various bank accounts associated with Bankman-Fried’s network of businesses. Such assets really aren’t expected to be part of the bankruptcy estate or to fall under any exemptions, thus they will not need to be frozen such as the majority of FTX assets during the wind-up process.
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Another purpose of this article is to give a brief definition of FTX and also explain its relationship with the Alameda Research Corporation before we delve deeper into those assets seized by federal authorities for nearly $700 million.
What is FTX?
FTX which is a short form of Futures Exchange is the name of the defunct Cryptocurrency exchange as well as Cryptocurrency arbitrage money run by FTX Trading Ltd. The platform launched in 2019, and by July 2021, it had amassed over a million members and been ranked as the third biggest Cryptocurrency exchange in terms of volume. FTX has its headquarters in the Bahamas and is incorporated in Antigua & Barbuda. The FTX.US exchange, which is exclusive to users in the United States, is closely related to the main FTX platform.
Relationship Between FTX and Alameda
Bloomberg published an article in September 2022 detailing the intimate ties amongst Alameda Research as well as FTX. As per Bloomberg, Alameda was the largest known depositor of stable coins on FTX in June and July 2022. Prior to that, the trading business had served as a market maker for FTX. Bloomberg claimed that the link between the two businesses would have been illegal under the regulations that govern corporations trading on conventional stock exchanges. Given Alameda’s participation in FTX, the trading business stood to benefit if and only if its competitors suffered losses on the exchange. Bankman-Fried has, at times, supported Alameda’s utilization of FTX as nothing more than a financing supplier.
More on SBF Assets Seizing by United States Federals
Gary Wang, co-founder of SBF and FTX, has over 55 million shares of Robinhood (HOOD) stock held via a holding company. Authorities in the federal government have claimed that the Robinhood stock was bought with consumer money that was looted. In May of 2022, SBF used Robinhood to acquire a 7.8 percent ownership in the company via the buying of shares. On November 11, FTX filed for bankruptcy, and the company is now asking a federal judge to rule on who owns almost $450 million in Robinhood stock. The prosecuting attorneys were successful in freezing three SBF accounts. The officials did not disclose the exact sum that was seized. Binance and Binance U.S. reportedly had money frozen by federal authorities.
The Department of Justice froze almost $7 million in other Bankman-Fried and FTX-related Silvergate accounts. In the past, the DOJ froze roughly $50 million held by FTX Digital Markets at Moonstone Bank, a little Washington area financial institution. The Department of Justice (DOJ) said that the amount of the assets in three Binance accounts linked to Bankman-Fried might be susceptible to criminal forfeiture.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.
