BlockFi Looks to Dismiss Bankruptcy Case for SBF’s Robinhood Shell Company

Bankrupt crypto lender BlockFi on Thursday moved to strike out the bankruptcy case of Emergent Fidelity Technologies, as a battle over around $600 million in assets mainly owned by FTX founder Sam Bankman-Fried becomes ever more complex.

Emergent, an Antiguan shell company 90% owned by Bankman-Fried, owns 56 million shares of online broker Robinhood (HOOD) plus some cash, and apparently little else.

Those assets are now the subject of a legal tussle between FTX, BlockFi, and the Department of Justice and the Robinhood Board itself– and BlockFi believes Emergent’s Antiguan liquidators are making it even more complex by filing for Chapter 11 bankruptcy in the U.S.

“Neither law nor equity require the doing of a futile act. But this bankruptcy case asks the Court to do just that—to ‘reorganize’ an empty shell,” BlockFi’s filing said.

The bankruptcy filing, made Feb. 3, was not made in good faith; the company isn’t eligible, having no employees, no income and no business; and the case exists “solely” to advance the interests of Antiguan liquidators who’ve already gained over $1.7 million in fees, BlockFi said.

BlockFi has taken legal action to secure access to the stocks, which it says were security for a loan made Nov. 9. The Department of Justice seized the assets in January, as it investigates fraud charges against Sam Bankman-Fried and Gary Wang, who owns the remaining 10% of Emergent. Bankman-Fried has pleaded not guilty while Wang has entered a plea deal.

Counsel for Emergent Fidelity did not immediately respond to a request for comment.

Read more: Robinhood Shares Worth Nearly $500M Seized in FTX Case