BlockFi files for bankruptcy and sues SBF on same day

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Cryptocurrency lender BlockFi filed for bankruptcy on Monday and, a few hours later, sued Sam Bankman-Fried’s (SBF) investment firm for withholding Robinhood stock it promised as collateral, Financial Times (FT) reports.

BlockFi was ‘bailed out’ by SBF back in June, with $250 million promised. In October, it was reported that the crypto lender had exposure to $1.8 billion in loans.

Now, with SBF’s crypto exchange FTX bankrupt, BlockFi’s exposure to the firm could be as high as $4-5 billion. BlockFi said on Monday that SBF’s investment firm Alameda Research had defaulted on $680 million of collaterized loans at the beginning of the month.

However, BlockFi’s complaint states that just a few days before FTX went bankrupt, on November 9, SBF’s investment firm Emergent Fidelity Technologies (EFT) guaranteed payment obligations of an ‘unnamed borrower’ by pledging ‘common stock’ as security. This unnamed borrower is Alameda, according to documents seen by FT.

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The ‘common stock’ in question is SBF’s 7.6% stake in investing app Robinhood. However, SBF was reportedly trying to sell his shares after pledging them to BlockFi, sources report.

BlockFi further mentioned EFT’s broker, ED&F Man Capital Markets, in the lawsuit for refusing to transfer the collateral to BlockFi. However, the firm insists that it wouldn’t do so without an order from the bankruptcy court.

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