In return for the company waiving its claims on up to $600m in cash and Robinhood shares, FTX debtors will pay Emergent $14m to cover administrative costs.
A transaction has been made between the bankrupt cryptocurrency exchange FTX and Emergent Technologies, founded by Sam Bankman Fried, regarding more than $600 million worth of Robinhood shares.
According to a September 6 motion filed by FTX CEO John Ray III in a Delaware Bankruptcy Court, Emergent would get $14 million from FTX to cover administrative costs associated with the company withdrawing a petition to collect 55 million Robinhood shares and cash.
Additionally, the accord allows Emergent to finish its Antigua bankruptcy case soon.
According to FTX, the deal is an essential component of its restructuring plan to optimize value for creditors. It helps collect more money for its creditors while averting additional litigation costs.
Ray indicated that “good faith arm’s length negotiations between the parties and that such negotiations were free of any collusion” produced the agreement in a statement he released on September 6.
Through a deal with Bankman-Fried and Alameda Research, the cryptocurrency trading company he formed, Emergent purchased around 56 million Robinhood shares in May 2022 for an estimated $600 million.
The Justice Department seized shares in January 2023 after FTX collapsed in November 2022. Since then, several parties have claimed ownership or rights to the shares, including FTX, BlockFi, Bankman-Fried, and Emergent.
On September 1, 2023, they were liquidated to Robinhood, who paid around $606 million to buy back the shares.
In February 2023, Bankman-Fried and Gary Wang, the former co-founder of FTX, created Emergent Fidelity Technologies, an offshore investment firm, filed for Chapter 11 bankruptcy.
Bankman-Fried was given a 25-year prison term in late March for his involvement in a significant scam that caused the demise of other well-known cryptocurrency businesses, including his own.
On October 22, there will be a hearing on the motion.
