BlockFi, a cryptocurrency lending firm that recently went bankrupt has decided to file a motion against Emergent Fidelity Technologies. The motion demands the court for Emergent Fidelity’s dismissal of the bankruptcy case.
BlockFi Demands Dismissal of Bankruptcy Case
The surprising detail about Emergent Fidelity is that it is a company that is under the ownership of Sam Bankman-Fried (SBF). He was FTX exchange’s former CEO, which went bankrupt back in November 2022.
BlockFi, a cryptocurrency lending firm, which itself went bankrupt following the downfall of the FTX exchange has filed a motion against Emergent’s bankruptcy case.
The firm has demanded that Emergent Fidelity’s bankruptcy case must be dismissed. To stop the proceeding of the bankruptcy case, the lending firm has demanded its dismissal by filing a motion.
Motion Filed by BlockFi
It was on Thursday when the lending firm reportedly filed a motion against the holdings firm. The motion for dismissal was filed by the Delaware District’s bankruptcy court.
According to the lending firm, the particular holdings firm is not eligible to file for bankruptcy. The firm has claimed that the only assets the particular firm holds are the shares belonging to Robinhood.
The firm reportedly holds more than 50 million shares in its possession. These shares belong to the app-based crypto trading platform.
As communicated by the firm, Emergent is currently in possession of 56 million shares that belong to Robinhood. These were the shares that Sam Bankman-Fried had acquired from Robinhood.
Just like the rest of the companies owned by Sam Bankman-Fried, Emergent Fidelity had also filed for Chapter 11 bankruptcy. It is considered a voluntary bankruptcy where the filer seeks protection from creditors.
According to reports, BlockFi legal teams are not ready to let Fidelity get away with bankruptcy. Instead, it has gone after them filing a motion against the bankruptcy the holdings firm had filed.
The firm has added in the motion that the court must take into consideration that Fidelity did not file for bankruptcy alongside the FTX exchange.
Instead, it did it more than three months after the FTX exchange had filed for bankruptcy. They mentioned in the motion that the holdings firm filed for bankruptcy on February 5.
This goes to show that the firm filed for bankruptcy three months after FTX had gone bankrupt.
Ownership Details of Emergent Fidelity
The details pertaining to the ownership of Emergent Fidelity confirm that it has two co-owners. The first and majority owner is Sam Bankman-Fried, who has 90% of the ownership of the company.
Gary Wang, who was the former executive at the FTX exchange owns a 10% stake in the company.
More details show that the holdings firm only had $20.7 million in cash. Apart from the cash holdings, the firm has $600 million worth of shares belonging to Robinhood.
Apart from the above, the company has no other assets or funds in holdings whatsoever.
BlockFi Wants Robinhood Stake Liquidated
As SBF has a majority stake in Fidelity, it means that he owns most of the shares belonging to Robinhood. The company wants the shares to be sold and wants the money to be released back to its platform.
BlockFi wants to have custody of the stocks that are for Robinhood and are under the possession of SBF.
The lending firm has claimed that a loan agreement worth $680 million had been formed between Emergent and their company.
The agreement stated that the Robinhood shares would act as the collateral for the loan and other major firms belonging to SBF were involved in the agreement as well.
The firm officials have claimed in the motion that Alameda Research, the crypto trading platform owned by SBF was involved in the agreement process.
Looking at the details, it is easier to establish that BlockFi has a strong claim against Fidelity. If things go in its favor, then the bankruptcy case will be dismissed.