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FTX case sees a new development. A lawsuit has been filed against Sullivan & Cromwell, the law firm responsible for handling the bankruptcy proceedings of the cryptocurrency exchange FTX. The $180 million in earnings that Sullivan & Cromwell law firm obtained from FTX transactions is increasing the concerns of creditors. FTX creditors accuse the firm of being overly involved with the exchange, believing this undermines the impartiality of the bankruptcy process.
What’s at the Heart of the Lawsuit?
The focus of the lawsuit is on Sullivan and Cromwell’s long-standing relationships and previous business deals with FTX, raising doubts about the impartiality of the bankruptcy hearing. These allegations date back to 16 months prior, when Sullivan and Cromwell served as outside counsel for FTX.
During this time, it is reported that the firm earned $8.5 million through legal fees. This situation is increasing concerns about the financial relationship between the firm and the exchange. Moreover, the role of Ryne Miller, a former Sullivan and Cromwell attorney who became Chief Legal Officer at FTX in 2021, is also drawing attention.
The lawsuit claims that Sullivan and Cromwell had special knowledge about FTX’s operations and supported the company’s deceptive actions. It is also alleged that the firm represented closely related affiliates of FTX and participated in controversial financial transactions through a special intermediary alleged to finance FTX customer funds.
Financial Benefits Under Scrutiny
The financial benefits that Sullivan and Cromwell gained from their relationship with the cryptocurrency exchange FTX are being carefully examined as the exchange is on the brink of bankruptcy. The fees the law firm earned from the bankruptcy proceedings alone exceed $180 million.
Ultimately, this is a considerably high figure. It is also provoking the reaction of FTX creditors. These earnings support the claims of financial gains arising from the firm’s relationship with FTX and, consequently, the allegations of a conflict of interest.
The lawsuit filed is just one example of Sullivan and Cromwell’s role in FTX’s bankruptcy. Initial concerns about the firm’s ability to conduct an independent investigation into the collapse of FTX were raised by US senators and other stakeholders. However, the law firm was selected to take responsibility for the bankruptcy proceedings.
