Sam Bankman-Fried, the disgraced former chief executive of collapsed cryptocurrency exchange FTX, and fellow founder Gary Wang bought a stake of about 7.6 per cent in stock trading app Robinhood earlier this year for $546 million.
The pair borrowed the money from Mr Bankman-Fried's hedge fund Alameda Research and purchased the shares in four tranches through a holding company in Antigua, an affidavit said.
The Antigua-based holding company is 90 per cent owned by Mr Bankman-Fried while the remaining 10 per cent belongs to Mr Wang, it said.
Mr Bankman-Fried, 30, lost his $16 billion fortune overnight, in what has been described as the biggest one-day loss on the Bloomberg Billionaires Index, after FTX filed for bankruptcy in November.
He was arrested in the Bahamas on December 12 after federal prosecutors in the US charged him with eight criminal counts — including conspiracy, wire fraud and money laundering — for allegedly misusing billions of dollars in customer funds before the $9 billion collapse of FTX and Alameda Research.
Prosecutors say Mr Bankman-Fried was engaging in criminal activity as far back as 2019.
According to the indictment, he deliberately and knowingly “agreed with others to defraud customers of FTX.com by misappropriating those customers’ deposits and using those deposits to pay expenses and debts” of Alameda Research.
He is also accused of conspiring with others to defraud FTX lenders “by providing false and misleading information to those lenders regarding Alameda Research’s financial condition”.
The US Securities and Exchange Commission said earlier this month that Mr Bankman-Fried raised about $2 billion from investors.
The regulator also said he concealed risks, the nature of FTX’s relationship with Alameda Research and commingled customer funds.
Mr Bankman-Fried diverted billions in customer funds to grow his other entities, the SEC said in a complaint filed in New York’s Southern District court.
Alameda Research was allowed to carry a negative balance on FTX and was exempt from the cryptocurrency exchange’s risk protocols, according to the complaint.
The SEC said that Mr Bankman-Fried personally directed that FTX’s “risk engine” not apply to Alameda and hid the extent of the ties between the two entities from investors.
Mr Wang has pleaded guilty to four counts of fraud and conspiracy, in co-operation with US prosecutors investigating FTX’s collapse.
Mr Bankman-Fried is currently under house arrest at his parents’ home in California after a US court granted him bail of $250 million.
Meanwhile, the FTX founders' stake in Robinhood is at the centre of a separate legal battle over the assets associated with the cryptocurrency exchange's bankruptcy.
Four separate entities have laid claim to the approximately 56 million shares, according to a motion filed by FTX earlier this month in the Delaware bankruptcy court.
The platform's new management, which is trying to claw back funds for affected investors and customers, wants to wrest control of the shares from the Antigua holding company owned by Mr Bankman-Fried and Mr Wang.
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Mr Bankman-Fried himself also claims ownership of the shares, seeking a source of payment for legal expenses, according to FTX.
Bankrupt cryptocurrency lender BlockFi and an individual FTX creditor are also claiming the Robinhood shares.
Because of the competing claims, FTX asked the 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”.
