Bankruptcy Lawyers Could Agree To Stall Litigation Over Bankman-Fried's Robinhood shares

Bankruptcy lawyers battling over Sam Bankman-Fried's $465 million of Robinhood shares are hashing out a deal to shut down litigation on the matter until the FTX founder's criminal case is resolved.

Bankrupt crypto firms FTX and BlockFi have each tried to claim the shares, which were held in Bankman-Fried's Emergent Fidelity Technologies entity and seized by the Justice Department in January.

Prosecutors are worried that litigation over the Robinhood shares could interfere with Bankman-Fried's ongoing criminal case. The shares are expected to eventually go through a criminal forfeiture proceeding, according to a lawyer for the Justice Department. 

"I can guarantee you I'm doing nothing that's going to affect the ownership of those shares. I'm not going to make any rulings one way or the other on who owns those shares. That's not my decision at this point," Judge John Dorsey said during a tense hearing in the U.S. Bankruptcy Court for the District of Delaware.

Lawyers for Emergent Fidelity Technologies, FTX and BlockFi said they will work on a stipulation that would shut down litigation related to the Robinhood shares until Bankman-Fried's case is finished. They will update Dorsey, who also oversees the sprawling FTX bankruptcy case, on their progress at an April 12 hearing.

Criminal charges

Bankman-Fried is facing a litany of criminal charges over his alleged wrongdoing at FTX and could spend the rest of his life in jail if he is convicted. The former FTX CEO has argued that he needs the Robinhood shares to fund his legal defense.

During the hearing, BlockFi agreed to withdraw its motion to dismiss the Emergent Fidelity Technologies bankruptcy case. The defunct crypto lender had also filed a motion challenging FTX's standing to object to its motion to dismiss the Emergent bankruptcy case, which the judge dismissed.

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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