US Government Seizes Nearly $700 Million in Assets Belonging to SBF

Federal prosecutors have seized nearly $700 million in cash and assets connected to Sam Bankman-Fried from crypto brokerage, exchange, and traditional banking institutions.

Federal prosecutors have seized nearly $700 million worth of assets belonging to disgraced FTX co-founder and former CEO Sam Bankman-Fried. According to a court filing published Friday, the assets taken were shares in Robinhood, a crypto brokerage firm that SBF owned. 

Prosecutors have alleged that the Robinhood shares were purchased using allegedly stolen customer funds, a fact which came to light during investigations relating to FTX and Alameda’s relationship last year. 

Sam Bankman-Fried had also revealed in May that he’d purchased a 7.6% stake in Robinhood, calling it an attractive investment. However, he has repeatedly denied misappropriating investors’ funds. 

Federal Prosecutors Seize SBF Funds - 

CNBC reported that three of the seized accounts were held at Silvergate Bank, in the name of FTX Digital Markets, with over $6 million. The assets, held in the name of a Bahamian subsidiary, are now in government custody. 

Silvergate Capital also disclosed that its shares had plunged by 42.7% following massive customer withdrawals that dropped total deposits from digital asset customers from $11.9 billion to $3.8 billion. 

The withdrawals came after FTX’s scandal, and Silvergate’s affiliation with the exchange raised questions about the stability of the digital asset industry. At the end of December, $150 million of the bank’s deposits were held by customers who had filed for bankruptcy protection, Silvergate said.  

The crypto brokerage ended up selling $5.2 billion of debt securities, creating a loss on sale of $718 million to raise funds. It also laid off 40% of its workforce and dropped its mortgage warehouse lending business. 

Moonstone Bank, a U.S. financial institution, was in the custody of $50 million. 

Letters from Sens. Elizabeth Warren, D-Mass., and Tina Smith, D-Minn., members of the Senate Banking, revealed that Alameda, FTX’s sister company, had invested in the Washington-based bank. 

The letter also highlighted that the head of Moonstone’s parent company FBH Corp also chairs Bahamas-based Deltec Bank, an institution that offers banking services to FTX trading partner and Tether.

“Banks’ relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access to banks,” the senators wrote, adding that the relationship between crypto companies and small banks could give the industry further access into the traditional banking sector. 

Three Binance accounts also held funds and assets connected to  FTX, although the funds were not disclosed. 

The exchange had previously located more than $5bn (£4.1bn) of assets in January, excluding assets seized by the Securities Commission of the Bahamas. 

“We have located over 5 billion dollars of cash, liquid cryptocurrency, and liquid investment securities," Andy Dietderich, an attorney for FTX, told US Bankruptcy Judge John Dorsey in Delaware.”

It is not yet certain if FTX investors will recover their losses, nor the extent of their losses been determined.