$465M of Robinhood shares linked to Sam Bankman-Fried will be seized by the Justice Department

The US Department of Justice is working to seize $465 million worth of Robinhood Markets Inc HOOD stock associated with Sam Bankman-Fried, the founder of the exchange's collapse of FTX cryptocurrency.

What happened: Prosecutors do not consider Robinhood's 56 million shares to be part of the bankruptcy estate, U.S. attorney Seth Shapiro told the Bankruptcy Judge John Dorsey, Reuters reported.

Competing claims over Robinhood stock could be settled in forfeiture proceedings, Shapiro says.

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Why it matters: Bankman-Fried, charged with eight counts related to the collapse of FTX and Alameda Research, pleaded not guilty Tuesday in federal court in New York.

Charges include conspiracy to commit wire and securities fraud, money laundering, and conspiracy to circumvent campaign finance regulations.

Claims over Robinhood shares have been made by BlockFi, FTX and liquidators in Antigua, according to Reuters.

Late last month, FTX attempted to block cryptocurrency trading platform BlockFi from claiming Robinhood shares, claiming they belonged to Alameda Research.

BlockFi had sued Bankman-Fried holding company Emergent Fidelity Technologies for the shares that were allegedly placed as collateral in November.

Price Action: On Wednesday, shares of Robinhood closed up 3.5% at $8.36 and fell 0.1% after hours trading, according to Benzinga Pro data.

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