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FTX, the now-bankrupt cryptocurrency exchange, has reached a settlement with Emergent Technologies, a firm founded by Sam Bankman-Fried, over a dispute involving over $600 million worth of Robinhood shares. According to a Sept. 6 motion filed by FTX’s current CEO John Ray III, FTX has agreed to pay Emergent $14 million to cover administrative expenses in exchange for Emergent withdrawing its claim to the 55 million Robinhood shares.
The settlement, which was filed in Delaware Bankruptcy Court, marks a significant development in FTX’s efforts to recover funds for its creditors. The deal also provides a path for Emergent to swiftly resolve its own bankruptcy case in Antigua. In his statement, Ray emphasized that the agreement was reached through “good faith arm’s length negotiations,” which were free of any collusion between the parties.
The Battle For Robinhood Shares
The dispute over the Robinhood shares dates back to May 2022, when Emergent, in partnership with Bankman-Fried’s trading firm Alameda Research, acquired approximately 56 million shares of the popular trading platform. These shares became the focus of multiple claims after the collapse of FTX in November 2022. Various entities, including FTX, BlockFi, and Emergent, all asserted ownership of the shares. The U.S. Department of Justice intervened, seizing the shares in January 2023 amid the unfolding bankruptcy proceedings.
Robinhood repurchased the shares on Sept. 1, 2023, for roughly $606 million, officially ending its entanglement in the legal battle. However, the proceeds from the sale remain contested, with FTX’s creditors looking to claim a share of the funds.
Maximizing Creditor Recovery
The deal between FTX and Emergent is a crucial step in FTX’s broader reorganization plan. The exchange hopes to maximize the value recovered for its creditors by avoiding further costly litigation. FTX’s CEO John Ray has emphasized the importance of this agreement, stating that it saves the bankruptcy estate from additional legal expenses, which would otherwise reduce the funds available for distribution to creditors.
FTX’s downfall in November 2022 sent shockwaves through the cryptocurrency industry, leading to widespread losses and legal battles involving its former executives, including Sam Bankman-Fried. Bankman-Fried, who co-founded both FTX and Emergent Technologies, was sentenced to 25 years in prison in March 2024 for his role in a massive fraud scheme that contributed to the collapse of FTX and other prominent crypto companies.
Hearing Set for October
A hearing on the FTX-Emergent settlement is scheduled for Oct. 22. The court’s approval of this deal could expedite the resolution of both companies’ bankruptcy cases. For FTX, it represents a pivotal moment in the long road toward repaying its creditors, while for Emergent, the agreement offers a path out of its financial woes in Antigua.
Also Read: FTX Receives $6.275M USDT From OKX – Key Step In $14.5B-$16.3B Repayment Plan Amid SEC Scrutiny
As the October hearing approaches, creditors and other stakeholders are closely watching the outcome, hoping that the resolution will bring them one step closer to recovering their lost funds.
This deal between FTX and Emergent represents a significant milestone in the complex and ongoing legal battles following FTX’s collapse. By avoiding further litigation and securing a payout, FTX moves closer to its goal of maximizing creditor recoveries.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Crypto and blockchain enthusiast.
