PanamaTimes

Friday, Mar 29, 2024

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.
Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×