(Bloomberg Law) — FTX investors accuse Sullivan & brought charges against Cromwell.
Most Read Articles on Bloomberg
Sullivan & Cromwell's services “far exceeded those that a law firm would normally provide,” the investors' complaint said. “The lawyers were diligent in developing creative as well as misleading strategies to facilitate FTX’s fraudulent conduct.”
The lawsuit, filed Friday on behalf of FTX's potential customer base, alleges that FTX and its founder Sam Bankman-Fried, for 16 months in the midst of the exchange's collapse in 2022. – Further scrutiny of an elite Wall Street law firm that admitted to having worked on 20 legal matters for Bankman Fried. Reporting a liquidity crisis.
Sullivan & Cromwell did not immediately respond to requests for comment Saturday. The Moskowitz law firm, which is leading lawsuits against Tom Brady and other high-profile supporters of FTX, filed the lawsuit in Miami federal court.
Investors claim that the company “actively participated” in the FTX fraud through its legal work and was able to gain deep insight into the inner workings of the exchange. Investors allege that the firm's lawyers knew where clients' funds were being held and about the “untruthful, fraudulent practices and misappropriation” of those funds.
This lawsuit makes Sullivan & Cromwell the second law firm to face investor litigation for allegedly aiding and abetting FTX fraud.
Silicon Valley law firm Fenwick & West, which served as lead legal counsel for cryptocurrency exchanges, faces separate lawsuits along with venture and private equity firms including Sequoia Capital, Thoma Bravo and Paradigm. There is.
Bankman Fried was found guilty in November of fraud and conspiracy for siphoning client money to affiliated hedge funds for risky investments, political contributions and expensive real estate.
accept cryptocurrencies
Sullivan & Cromwell was founded in 1879 and is one of the largest law firms in the United States. The firm is open to working with entities in the digital asset space, and is advising Coinbase, the largest U.S. exchange, in its fight with the Securities and Exchange Commission. The company will be appointed as an independent monitor for Binance Holdings following the latter's multibillion-dollar settlement with the US.
The company became FTX's outside counsel in 2021 after FTX.US hired Ryne Miller as general counsel. Miller, who came to FTX from Sullivan & Cromwell, immediately prioritized moving the business to his former firm, according to the investor complaint.
Issues Sullivan & Cromwell worked on included bankruptcy proceedings by FTX and the regulator's proposed acquisition of the assets of cryptocurrency exchange Voyager to the Commodity Futures Trading Commission. The firm also represented Mr. Bankman Freed in a personal capacity in connection with his position at Robinhood Markets, a stock trading app company.
The firm's restructuring group, led by Andy Dietderich, has since served as FTX's primary bankruptcy counsel and has already billed at least $150 million for its work. Dietderich told the judge overseeing the bankruptcy case on January 31 that FTX plans to repay its customers. Don't omit it.
However, the federal appeals court also cited potential dispute issues raised regarding Sullivan & Cromwell's work with the exchange prior to bankruptcy in its ruling and ordered an independent examiner to investigate the FTX case. Ta.
This case is attributed to Edward Garrison and others. Al. v. Sullivan & Cromwell, SDFla., No. 1:24-cv-20630, February 16, 2024.
Contact the reporter on this story: Justin Wise at jwise@bloombergindustry.com
To contact the editor responsible for this article: John Hughes at jhughes@bloombergindustry.com
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
