Here’s why BlockFi is taking legal action against FTX’s Sam Bankman-Fried

The downward momentum instigated by the collapse of the FTX empire seems to be increasingly detrimental. Several platforms were immensely impacted by this and FTX-acquired firm BlockFi was certainly one among them. After filing for Chapter 11 Bankruptcy today, it was revealed that the platform was suing FTX’s former chief Sam Bankman-Fried.

The newly bankrupt firm filed a lawsuit, particularly against Emergent Fidelity Technologies. This is reportedly SBF’s holding company and the troubled crypto lender was after his shares in Robinhood that were previously put up as collateral.

This collateral was pledged back in early November. SBF managed to amass a 7.6 percent stake in Robinhood in May. He purchased a whopping $648 million through Emergent Fidelity Technologies.

Through this latest lawsuit, BlockFi was reportedly seeking turnover collateral from Emergent as part of a pledge agreement from November 9 in which Emergent agreed to a payment schedule with BlockFi that it is believed has not been met.

As seen in the above tweet, BlockFi was demanding that SBF hand over $575 million worth of Robinhood stock.

It was also revealed that SBF was trying to raise funds by selling off his Robinhood shares after entering a collateral agreement with BlockFi. It should be noted that this was before the downfall of FTX.

Here’s how much crypto BlockFi sold ahead of bankruptcy filing

Looks like the FTX contagion has persisted. BlockFi’s descent was expected as it was intensively associated with FTX. Therefore, its bankruptcy filing did not surprise the crypto masses. However, it was brought to light that the crypto lender sold around $239 million of crypto for the filing. The firm did so in order to fund its bankruptcy process without taking a loan.

In addition to this, the firm went on to warn 250 workers that their jobs were at risk.

While the community was just recovering from the collapse of FTX, BlockFi’s latest filing is expected to cause a level of anxiety among investors.