BlockFi gives status update on sale process, seized Robinhood shares

By Sarah Lizee

Olympia, Wash., Jan. 9 – The court overseeing BlockFi Inc.’s Chapter 11 bankruptcy case held a status conference Monday morning, and the debtor gave updates on how the case has progressed.

The company told the U.S. Bankruptcy Court for the District of New Jersey that it has been in contact with 106 parties regarding the potential sale of some or all of its assets. The debtor plans to file bid procedures soon.

As previously reported, BlockFi filed a plan that also includes a standalone restructuring, but because the company’s path forward remains unclear regarding issues with FTX’s bankruptcy and the impact on the cryptocurrency markets, BlockFi is considering other strategies, including the potential sales.

Robinhood shares seized

Also previously reported, since the Chapter 11 cases started, several court actions in different jurisdictions have been made to gain control of 56 million shares of Robinhood Markets, Inc. class A common stock, including by BlockFi, FTX, Yonathan Ben Shimon (a prepetition creditor of FTX) and FTX’s former chief executive officer, Sam Bankman-Fried.

However, on Jan. 4, the Department of Justice seized the shares, which were previously frozen in a brokerage account at ED&F Man Capital Markets Inc. in New York City at FTX’s request.

BlockFi had previously filed a motion for turnover of the shares and had also filed an adversary proceeding against ED&F and Emergent Fidelity Technologies Ltd. – the entity 90% owned by Bankman-Fried which held the shares at the time of FTX’s bankruptcy petition.

On Monday, the court denied BlockFi’s turnover motion, saying it wasn’t in a position to provide that relief at this point. However, the court said the parties should go forward with the adversary proceeding.

Other motions

In December, BlockFi filed a motion seeking to return frozen crypto to its wallet users.

There have been some objections to that motion, but BlockFi said it believes those can be reconciled in due course.

Several second-day motions have been filed, and many of those are set to be heard next week.

The company said it plans to file its schedules of assets and liabilities and its statement of financial affairs with the court on Jan. 11.

Based in Jersey City, N.J., BlockFi is a crypto financial services company. The company filed bankruptcy on Nov. 28 under Chapter 11 case number 22-19361.

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