Sam Bankman-Fried (SBF) faces a new battleground in the ongoing fallout from FTX as shareholders pursue redemption, according to a review of court documents by The Telegraph.
According to a September 2 Telegraph story, the founder of the now-collapsed cryptocurrency exchange stands accused of failing to cooperate with liquidators appointed by an Antiguan court to oversee bankrupt holding company Emergent Fidelity Technologies (EFT).
SBF Accused of Blocking Liquidation of Bankrupt Holding Company
EFT was co-founded by FTX founder Sam Bankman-Fried and former executive Gary Wang. It filed for bankruptcy on February 23, 2023.
In an affidavit seen by The Telegraph, a British newspaper, the liquidators said: “Mr Bankman Fried has not cooperated with the liquidators or provided the EFT’s corporate documents.”
Until recently, EFT owned 56 million shares in the stock trading app Robinhood worth $606 million. This considerable stake sat frozen by the US Department of Justice amid sweeping fraud charges levied against Bankman-Fried late last year. Still, FTX creditors eyed the cache of shares in hopes of recouping losses from the exchange’s sudden implosion.
Robinhood reclaimed the shares on Friday, with proceeds held in a government account per a federal judge’s order. Yet the saga drags on as creditors insist Bankman-Fried stonewalls the EFT liquidation process.
How Is Bankman-Fried Paying His Legal Bills?
In the affidavit, the court-appointed liquidators charged Bankman-Fried with not furnishing EFT’s corporate records. They also allege he filed some 16 applications obstructing their work, despite professing relative poverty.
Bankman-Fried is publicly claiming to be down to his last $100,000 in cash, as first determined in December 2022.
The Telegraph has twice asked his lawyer, David Dorsett, how his client was paying his legal fees, considering his professed lack of means. However, the attorney declined to comment.
Creditors have grown incensed over what they call deliberate obstruction by Bankman-Fried. Some believe his legal maneuvers in Antigua possibly breach bail terms limiting his spending, which is limited to $1,000 per day.
Though he publicly bemoans his bail restrictions and dwindling funds, creditors’ motions demanding financial disclosures from Bankman-Fried have gone unanswered.
In response to stalled efforts by the EFT liquidators, an Antiguan judge emphasized the urgent need to acquire complete financial records for the bankrupt holding company’s assets. Bankman-Fried’s attorney maintains his client complied and cooperated fully with the judge’s orders.
Yet in several instances, the founder neglected to pay legal fees and security costs as ordered by the court.
The protracted legal fight spotlights the simmering fallout from FTX’s shocking collapse last November. Once valued at $32 billion, the cryptocurrency exchange crumbled amid charges of misused customer funds and inflated assets.
Bankman-Fried now faces criminal fraud charges in New York as creditors and investigators try to untangle the wreckage. The FTX’s founder’s trial is due to begin next month.
In the meantime, the once-favored son of crypto is detained at Brooklyn’s Metropolitan Detention Center, where he was moved after a judge accused him of intimidating witnesses.
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