FTX

FTX Founders Sam Bankman-Fried, Gary Wang Bought $600 Million Robinhood Stock Using Alameda Loans

Summary:

  • Bankman-Fried affirmed that 56 million Robinhood shares were bought with loans from Alameda Research between April and May 2022.
  • The loans were issued in several amounts to Sam and his co-founder Gary Wang, per a court affidavit.
  • FTX lawyers asked a judge to freeze the assets after BlockFi claimed ownership of SBF’s stake in Robinhood.

Disgraced crypto tycoon Sam Bankman-Fried told an Antiguan court that loans from Alameda Research were used to acquire a 7.6% stake in stock broker and crypto exchange Robinhood. Bankman-Fried affirmed the source of capital for his Robinhood stock scoop in a court affidavit shortly before his arrest in December.

As previously reported, troubled crypto lender BlockFi filed for ownership of Sam’s Robinhood. Lawyers for the bankrupt exchange asked a judge to freeze the assets for the benefit of creditors, debtors, and claimants. 

According to the affidavit, SBF acquired the shares along with FTX and Alameda co-founder Gary Wang. The pair domiciled Emergent Fidelity Technologies in Antigua to manage the investment in Robinhood. Bankman-Fried controlled 90% of Emergent while Gary assumed 10% control of the company, per court filing.

Gary and SBF then bootstrapped Emergent with loans from Alameda, securing tens of millions in loans. Alameda issued four promissory notes lending roughly $491 million to Bankman-Fried and $54 million to Gary, said SBF. Bankman-Fried added that extra capital to complete the massive $600 million purchase was probably also borrowed by the pair. 

In order to capitalize Emergent so that it could make the investment into Robinhood, Gary and I agreed to borrow funds from Alameda Research Ltd. Those funds were capitalized into Emergent and it used those funds to acquire the shares in Robinhood.

FTX Customer Funds Stolen?

The affidavit supposedly confirmed allegations from the CFTC and SEC that Alameda issued loans to individual and top executives within Bankman-Fried’s sunken crypto empire. Also, the CFTC’s complaint alleged that Alameda siphoned customer funds from FTX before the trading giant edged insolvency in May 2022.

Indeed, the filing from the U.S. regulator and SBF’s affidavit echoed concerns that the 56 million Robinhood shares were bought with stolen customer funds from FTX.  Individual creditor Yonatan Ben Shimon argued a similar claim to the Antiguan court. 

…Emergent acquired a 7/6% shareholding in Robinhood for about US$650 million possibly using funds improperly diverted from those invested by me and others with FTX. I know nothing regarding the source of the funds used to acquire the 7/6% interest in Robinhood beyond the fact that it was allegedly “working capital”.

– Yonatan Ben Shimon, indivudal creditor.

Bankman-Fried refuted allegations of criminal negligence prior to his arrest in the Bahamas and extradition to the United States. However, Alameda CEO Caroline Ellison testified to diverting user funds from SBF’s crypto exchange to his trading giant in a plea deal. 

FTX Founders Sam Bankman-Fried, Gary Wang Bought $600 Million Robinhood Stock Using Alameda Loans 13
Sam Bankman-Fried extradited to U.S. Image: The Telegraph