DOJ moves to seize Robinhood shares tied to FTX

The Department of Justice is preparing to seize roughly 56 million shares of digital investing platform Robinhood, of which FTX claims ownership, that are also claimed by failed cryptocurrency group BlockFi.

The DOJ's Seth Shapiro told the bankruptcy court handling FTX that the shares "aren’t property of the bankruptcy estate," according to the Wall Street Journal. Previously, a Manhattan court ordered the seizure of $93 million in FTX assets at Silvergate Capital Corp.

Ownership of the Robinhood funds was a matter of dispute prior to FTX's fall. FTX lawyer James Bromley said at the hearing that "[t]he question as to the ownership of those Robinhood shares was an open question before the seizure took place ...We wanted to make sure that it was clear the Robinhood shares that were being seized were being seized from accounts" outside of the firm's current control.

"We believe we have rights with respect to those assets that can be dealt with late... We are in alignment at the present time with the U.S. government and the law enforcement officials in taking these steps," he continued, per the WSJ.

Both American and Bahamian authorities are reportedly scrambling to freeze accounts containing FTX assets and to claw back some of the firm's remaining funds amid their ongoing investigations.

FTX's late November collapse has led to intense scrutiny of the firm's recordkeeping and management of its assets. Reports quickly emerged after the company's fall of missing investor funds and suspicious transfers to FTX's sister firm, hedge fund Alameda Research.

The cryptocurrency giant suffered a catastrophic collapse last year when investors simultaneously attempted to withdraw their stakes in the firm, rendering it unable to repay all of them.

Authorities in the Bahamas last year arrested FTX founder Sam Bankman-Fried at his home in the country and he has since been extradited to the United States to face a litany of charges in connection with the firm's collapse. He pleaded not guilty this week in a New York court and is currently under house arrest at his parents' California home, after securing release from federal custody on a $250 million bond.

His trial is set for Oct. 2. Meanwhile, FTX co-founder Gary Wang and former Alameda CEO Caroline Ellison have both pleaded guilty to criminal charges and are cooperating with prosecutors.