Sullivan & Cromwell To Fend For FTX
A Delaware bankruptcy court judge has given New York law firm Sullivan & Cromwell permission to continue representing FTX during its bankruptcy proceedings.
Judge John T. Dorsey issued the decision on January 20th, despite recent controversy about the white-shoe law firm having potential conflicts of interest, which critics say should disqualify Sullivan & Cromwell from acting as debtors’ counsel.
Former FTX attorney Daniel Friedberg, who served as the exchange’s chief regulatory officer, filed an unusual declaration containing numerous explosive allegations of wrongdoing in Sullivan & Cromwell’s previous work with FTX.
Friedberg claimed in his declaration that Ryne Miller, FTX US’s general counsel and a former partner at Sullivan & Cromwell, funnelled millions of dollars in legal work back to his former colleagues. The relationship between Miller and Sullivan & Cromwell was not initially disclosed by the law firm, prompting the United States Trustee’s Office to file an objection to Sullivan & Cromwell’s appointment as debtors’ counsel on January 13.
Friedberg and the U.S. Trustee’s Office are not the only ones who question Sullivan & Cromwell’s involvement in FTX.
On January 10, a bipartisan group of U.S. senators urged Judge Dorsey to appoint an independent examiner and to investigate Sullivan & Cromwell’s involvement. The senators stated that there are “significant questions about the firm’s involvement in FTX operations,” and that “to put it bluntly, the firm is simply not in a position to uncover the information required to ensure confidence in any investigation or findings.”
Former CEO Sam Bankman-Fried has also questioned Sullivan & Cromwell’s involvement in the bankruptcy process, claiming in a recent Substack post that FTX US was solvent when it filed for bankruptcy protection. He previously claimed that Sullivan & Cromwell improperly pressured him into allowing FTX to declare bankruptcy.
Judge Dorsey, on the other hand, was unmoved by the mounting concerns about Sullivan & Cromwell’s appointment as debtor’s counsel.
Judge Dorsey issued his decision to approve Sullivan & Cromwell’s appointment as debtors’ counsel after a brief recess to consider the arguments.
Of all the criticism leveled at Sullivan & Cromwell, which is paid $2,000 an hour for its work on the case, Bankman- Fried’s accusations seemed to irritate the firm’s lead attorney on the case, New York-based partner James Bromley.
(With inputs from Shikha Singh)
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