FTX’s Bankruptcy Law Firm Faces Class Action Alleging Involvement in Exchange’s Collapse
FTX’s bankruptcy law firm, Sullivan and Cromwell (S&C), is currently facing a class action lawsuit that claims the firm should be held partially responsible for the exchange’s collapse. The lawsuit alleges that S&C was closely involved with FTX prior to its collapse and gained knowledge of its fraudulent behavior. It also states that S&C billed around $8.5 million in fees during its 16-month tenure as FTX’s primary legal counsel. The class action further alleges that lawyer Ryne Miller, who joined FTX as General Counsel, pushed for business to be sent to S&C as outside counsel, resulting in various engagements. The lawsuit also highlights S&C’s income from overseeing the FTX bankruptcy proceedings, which has exceeded $180 million.
Concerns About S&C’s Role Raised by U.S. Senators
In January 2023, multiple U.S. Senators expressed concerns about S&C’s role in the FTX collapse and called for an independent examiner to oversee the investigation. Around the same time, former FTX CEO Sam Bankman-Fried claimed that S&C pressured the exchange into bankruptcy and influenced the appointment of its preferred CEO. In a bankruptcy hearing, creditors raised objections to S&C’s involvement and suggested it could be investigated for its own liability in the case. Despite objections, the judge approved S&C to be retained for the proceedings. However, in January 2024, the Third Circuit Court of Appeals ruled that an independent examiner must investigate FTX to shed new light on industry practices.
By
By
By
By