Sam Bankman-Fried, the disgraced founder of cryptocurrency exchange FTX, last week filed an objection to an automatic stay motion filed by FTX debtors in their Chapter 11 bankruptcy proceedings on his Antigua and Barbuda company Emergent Fidelity Technologies Ltd.

The FTX debtors are seeking $56 million in relief, held in assets by the company - of which Bankman-Fried owned a 90 percent stake in shares purchased via a loan from Alameda Research.

However, Bankman-Fried's attorneys, in documents filed in a Delaware court last week, said that the FTX debtors are not entitled to the relief sought in the stay motion because the shares are not the property of SBF's estate.

"The FTX debtors seek to disregard the separate existence of a corporation that is not a party to this action and encumber hundreds of millions of dollars' worth of assets to which they have no legal claim. The remedy they seek is extraordinary and inappropriate. Accordingly, the stay motion should be treated as a request for a preliminary injunction and subjected to a heightened standard of proof," the court documents state.

"In effect, the FTX debtors seek to encumber 56,273,269 shares of Robinhood Markets Inc.'s Class A common stock that are not owned by Alameda Research Limited or any other entity implicated in the FTX bankruptcy, and are instead owned by Emergent. Emergent's independent acquisition of the Robinhood shares is clearly set forth in an SEC filing made by Ryne Miller, general counsel of FTX and former partner at Sullivan & Cromwell LLP.

"Mr. Bankman-Fried and Zixiao ("Gary") Wang borrowed the funds for Emergent to purchase the Robinhood shares from Alameda and a set of loans were memorialized in four different promissory notes. The FTX debtors are aware of the existence of these promissory notes, but failed to reference them in the stay motion."

Bankman-Fried has pleaded not guilty to charges that he committed fraud and was released on $250 million bond.

Prosecutors allege that SBF agreed with others to defraud customers of FTX.com by misappropriating those customers' deposits and using those deposits to pay expenses and debts of Alameda Research, his proprietary cryptocurrency hedge fund, and to make investments.

SBF moved FTX to The Bahamas in 2021. In November 2022, after the company collapsed, Bankman-Fried resigned. He was later arrested at his home in Albany by Bahamian police and then extradited to the United States.

Click here to read more at The Nassau Guardian