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Please check back later. US government moves to seize $460 million Robinhood stake linked to Sam Bankman-Fried Allison Morrow Kara Scannell By Allison Morrow and Kara Scannell, CNN Updated 10:36 AM EST, Thu January 5, 2023 Link Copied! Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy, is escorted out of the Magistrate Court building in Nassau, Bahamas December 13, 2022. REUTERS/Dante Carrer Video Ad Feedback Prosecutor: FTX founder committed 'one of the biggest financial frauds' in US history 02:41 - Source: CNN Cryptocurrency, Blockchain and NFTs 16 videos Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy, is escorted out of the Magistrate Court building in Nassau, Bahamas December 13, 2022. REUTERS/Dante Carrer Video Ad Feedback Prosecutor: FTX founder committed 'one of the biggest financial frauds' in US history 02:41 Now playing - Source: CNN Binance Markets Now Video Ad Feedback Binance CEO: Regulation helps crypto credibility, but it's not 'a magical pill' 01:21 Now playing - Source: CNN Business nightcap crypto sam bankman fried 16x9 Video Ad Feedback How common are Ponzi schemes in crypto? Crypto billionaire Sam Bankman-Fried weighs in 03:59 Now playing - Source: CNN Business nightcap 061622 crypto clip 16x9 Video Ad Feedback What crypto skeptics dunking on the crypto faithful are missing 02:15 Now playing - Source: CNN US Microsoft founder, Co-Chairman of the Bill & Melinda Gates Foundation, Bill Gates, poses for a picture on October 9, 2019, in Lyon, central eastern France, during the funding conference of Global Fund to Fight AIDS, Tuberculosis and Malaria. - The Global Fund to Fight AIDS, Tuberculosis and Malaria on October 9, 2019, opened a drive to raise $14 billion to fight a global epidemics but face an uphill battle in the face of donor fatigue. The fund has asked for $14 billion, an amount it says would help save 16 million lives, avert "234 million infections" and place the world back on track to meet the UN objective of ending the epidemics of HIV/AIDS, tuberculosis and malaria within 10 years. (Photo by JEFF PACHOUD / AFP) (Photo by JEFF PACHOUD/AFP via Getty Images) Video Ad Feedback Video: Bill Gates mocks Bored Ape NFT's 01:35 Now playing - Source: CNN Bitcoins with US tax form 1040. Golden Bitcoin on tax form. Tax form pay concept Video Ad Feedback Here's why bitcoin's drop has investors worried 03:20 Now playing - Source: CNNBusiness A visual representation of the digital Cryptocurrency, Bitcoin on December 07, 2017 in London, England. Video Ad Feedback Stablecoins faltering amid crypto market volatility 03:23 Now playing - Source: CNN bitcoin mining washington watt dnt Video Ad Feedback A quarter of all the electricity in this county is powering Bitcoin mining 03:08 Now playing - Source: CNN Internet cables and power cables at a bitcoin mine in Sichuan Province, China, on September 27, 2016. Video Ad Feedback Bitcoin's carbon footprint is growing larger. 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Brown on cryptocurrency: Fraud, scams and outright theft 02:35 Now playing - Source: CNN bitcoin couple hack arrest Ilya Lichtenstein Heather Morgan Video Ad Feedback DOJ seizes $3.6 billion tied to New York couple's bitcoin hack 01:40 Now playing - Source: CNNBusiness ben mckenzie crypto Video Ad Feedback TV star has new role: Crypto critic 03:46 Now playing - Source: CNN The statue of former Los Angeles Lakers Magic Johnson is seen in front of Staples Center following an NBA basketball game between the Los Angeles Clippers and the San Antonio Spurs Tuesday, Nov. 16, 2021, in Los Angeles. The Staples Center in downtown Los Angeles will be renamed Crypto.com Arena on Christmas. The home of the NBA's Lakers and Clippers, the NHL's Kings and the WNBA's Sparks will change its name after 22 years. (AP Photo/Mark J. Terrill) Video Ad Feedback Crypto.com buys Staples Center naming rights 03:27 Now playing - Source: CNNBusiness 04 Bitcoin FILE Video Ad Feedback Crypto: The future of money or the biggest scam? 03:23 Now playing - Source: CNN JPMorgan Chase & Co. CEO Jamie Dimon speaks during the Business Roundtable CEO Innovation Summit in Washington, DC on December 6, 2018. (Photo by Jim Watson/AFP/Getty Images) Video Ad Feedback Jamie Dimon blasts bitcoin as 'worthless' 01:52 Now playing - Source: CNNBusiness See More Videos New York CNN -- The US government is stepping into a contentious, multijurisdictional legal battle over the ownership of hundreds of millions of dollars' worth of assets connected to the collapse of Sam Bankman-Fried's crypto empire. The Justice Department said Wednesday that has moved to seize millions of shares of Robinhood, the popular stock-trading app, whose ownership is disputed by several parties, including Bankman-Fried himself, his bankrupt crypto exchange FTX and another bankrupt crypto company. "We believe that these assets are not property of the bankruptcy estate or that they fall within the exceptions... of bankruptcy code," Seth Shapiro, a Justice Department attorney, said during a bankruptcy hearing in Delaware Wednesday. FTX founder Sam Bankman-Fried leaves Manhattan Federal Court after his arraignment and bail hearings on December 22, 2022 in New York City. Bankman-Fried, who was indicted on December 9th and arrested 3 days later by Bahamas law enforcement at the request of U.S. prosecutors, consented to extradition to the U.S. where he is facing eight criminal counts of fraud, conspiracy and money-laundering offenses which includes making illegal political contributions. He is potentially facing life in prison if convicted. He was released on $250 million bond with the bail package requiring him to stay with his parents in California. FTX founder Sam Bankman-Fried leaves Manhattan Federal Court after his arraignment and bail hearings on December 22, 2022 in New York City. Bankman-Fried, who was indicted on December 9th and arrested 3 days later by Bahamas law enforcement at the request of U.S. prosecutors, consented to extradition to the U.S. where he is facing eight criminal counts of fraud, conspiracy and money-laundering offenses which includes making illegal political contributions. He is potentially facing life in prison if convicted. He was released on $250 million bond with the bail package requiring him to stay with his parents in California. Michael M. Santiago/Getty Images Sam Bankman-Fried borrowed $546 million from his hedge fund to buy a Robinhood stake Four separate entities have laid claim to the approximately 56 million shares, worth about $460 million. FTX's new management, which is trying to claw back funds for investors and customers of the bankrupt platform, have sought to wrest control of the shares from an Antigua-based holding company 90% owned by Bankman-Fried. In May 2022, a few months before his companies collapsed and he was charged with defrauding his customers and investors, Bankman-Fried acquired a nearly 8% stake in Robinhood via a holding company he set up with FTX co-founder Gary Wang. That company, Emergent Fidelity Technologies, borrowed more than $546 million from crypto hedge fund Alameda Research, according to an affidavit Bankman-Fried filed in December. Bankman-Fried claims ownership of the shares, seeking a source of payment for legal expenses, according to FTX. Also claiming the Robinhood shares are bankrupt crypto lender BlockFi and an individual FTX creditor. Because the competing claims, FTX filed a motion earlier this month to the Delaware bankruptcy court to keep the assets frozen until the court "can resolve the issues in a manner that is fair to all creditors of the debtors." At the Wednesday hearing, FTX lawyer James Bromley said that while "we certainly believe we have rights with respect to those assets...we are in alignment at the present time with the US government and the law enforcement officials in taking these steps." Robinhood declined to comment on Thursday. The company's CEO, Vlad Tenev, told CNBC last month that he's "not surprised" the stake is one of the more valuable assets on FTX's books because it is a public company's stock. "We don't have a lot of information that you guys don't have," Tenev told CNBC. "We're just watching this unfold and ... it's going to be locked up in bankruptcy proceedings, most likely for some time." Crypto contagion The collapse of FTX triggered a panic across the digital asset ecosystem, prompting some firms to halt withdrawals and in some cases file for bankruptcy themselves. On Thursday, more evidence of the contagion emerged when Silvergate Capital, a crypto-focused bank, said that total deposits from digital asset customers fell 68% in the last quarter of 2022, to just $3.5 billion. As of December 31, roughly $150 million of Silvergate's deposits were from customers that have filed for bankruptcy. Silvergate shares fell nearly 40% Thursday morning. The bank said it would lay off 40% its staff, or about 200 people. "In response to the rapid changes in the digital asset industry during the fourth quarter, we took commensurate steps to ensure that we were maintaining cash liquidity in order to satisfy potential deposit outflows," said CEO Alan Lane on earnings call Thursday. Lane said the bank sold $5.2 billion of debt securities, resulting in a loss of $718 million for the quarter. Charges against SBF US prosecutors accuse Bankman-Fried of stealing customer funds from FTX to cover losses at Alameda, as well as to make investments in other companies, subsidize his luxury lifestyle, and make huge campaign donations to Democrats and Republicans in the United States. Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks on the day of a hearing at Manhattan federal court in New York City, U.S. January 3, 2023. REUTERS/Andrew Kelly Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks on the day of a hearing at Manhattan federal court in New York City, U.S. January 3, 2023. REUTERS/Andrew Kelly Andrew Kelly/Reuters FTX founder Sam Bankman-Fried pleads not guilty He pleaded not guilty to eight federal counts of fraud and conspiracy on Tuesday, and remains under house arrest at his parents' home in Palo Alto, California. Two of his former associates, however, have emerged as star witnesses for the prosecution. Both have pleaded guilty to fraud, directly contradicting Bankman-Fried, and are cooperating with prosecutors from the Southern District of New York. 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