FTX’s Sam Bankman-Fried Bought Robinhood Shares with Money Borrowed from Alameda

According to American media, SBF claimed that he borrowed $546 million of funds from FTXs affiliate trading firm, Alameda Research, to purchase shares in Robinhood Markets, Inc. In an affidavit provided to a Caribbean court before his arrest, Mr. Bankman-Fried said he and FTX co-founder Gary Wang together borrowed more than $546 million via four promissory notes in April and May this year. The borrowed funds were then capitalized into Emergent Fidelity Technologies, the entity through which they bought a 7.6% stake in Robinhood earlier this year.

Mr. Wang, FTX‘s former chief technology officer, and Caroline Ellison, Alameda’s former chief executive pleaded guilty to federal fraud charges last week. Mr. Bankman-Fried and Mr. Wang owned 90% and 10% of the Emergent vehicle, respectively, according to the affidavit.

Crypto lender BlockFi, which filed for bankruptcy in November, sued Mr. Bankman-Fried for his Robinhood shares. BlockFi alleged that it was owed the shares after they were pledged to BlockFi to guarantee Alameda's payment obligations. The shares were pledged as collateral against a loan taken out by Alameda Research – the same firm whose funds were used to purchase the shares to begin with, according to Tuesday's filing. BlockFi put the blame for its bankruptcy on its exposure to FTX and Alameda, saying the latter had defaulted on a $680 million collateralized loan in early November, just as SBFs empire was starting to implode.

Both Bankman-Fried and Wang declined to comment.

SBF “Borrowed” money to buy the shares and then took out a loan using the shares as collateral, which is irritated by many.

Former Alameda CEO Caroline Ellison said on Dec. 23 as part of her plea deal that “Alameda was borrowing funds that FTXs customers had deposited onto the exchange.”

Robinhood's stock has lost nearly 40% since early November when FTX's problems emerged.