3

FTX Lawyers Criticized by Senators After Earning $20.5m Pre-Bankruptcy

 1 year ago
source link: https://www.businessinsider.com/ftx-lawyers-criticized-senators-elizabeth-warren-earning-20m-pre-bankruptcy-2023-1
Go to the source link to view the article. You can view the picture content, updated content and better typesetting reading experience. If the link is broken, please click the button below to view the snapshot at that time.
neoserver,ios ssh client
Home Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.Finance

A law firm involved in FTX's bankruptcy is under fire from 4 senators after an ex-customer noted that it earned $20 million from the crypto giant

Jan 11, 2023, 12:57 PM
Save Article IconA bookmark
Share iconAn curved arrow pointing right.
Elizabeth Warren and Sam Bankman-Fried, the FTX founder, leaving Manhattan Federal Court in January.

Elizabeth Warren and Sam Bankman-Fried, the FTX founder, leaving Manhattan Federal Court in January. Tom Williams-Pool/Getty Images; Fatih Aktas/Anadolu Agency via Getty Images

  • An FTX customer filed an objection to law firm Sullivan & Cromwell acting as the crypto exchange's counsel.
  • The objection notes that FTX had already done business with the law firm to the tune of $20.5 million.
  • Now four senators including Elizabeth Warren have written to the judge with concerns about S&C.
Sign up for our newsletter to get the latest stories in hedge funds, PE, fintech, and banking — delivered daily to your inbox.
Email address
By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy.

Four US senators have raised concerns about the law firm handling FTX's bankruptcy case, Sullivan & Cromwell, due to the two companies' past relationship.

The bipartisan letter was sent on Monday by Democrats Elizabeth Warren and John Hickenlooper, and Republicans Thom Tillis and Cynthia Lummis, in response to a motion filed in the Delaware bankruptcy court on January 4.

An FTX customer called Warren Winter called on the court to disqualify Sullivan & Cromwell as the debtors' counsel, or otherwise "provide robust disclosures." According to his motion, which Insider has seen, FTX paid the law firm $20.5 million in fees and retainers before it filed for bankruptcy on November 11 last year.

That court filing also pointed out that FTX US's general counsel, Ryne Miller, was a partner at the same law firm which is now investigating possible wrongdoing at FTX.

Winter called Sullivan & Cromwell's appointment as FTX's counsel: "The most flagrant attempt by a fox to guard a henhouse in recent memory."

And now four senators have raised concerns about the law firm too, saying Sullivan & Cromwell "may well bear a measure of responsibility for the damage wrecked on the company's victims."

"Put bluntly, the firm is simply not in a position to uncover the information needed to ensure confidence in any investigation or findings," the letter added. 

After FTX's collapse, Senator Warren wrote an op-ed for the Wall Street Journal, calling for regulation "before the next crypto catastrophe takes down our economy."

A spokesperson for Sullivan & Cromwell said that John J. Ray III, the former Enron CEO who is now in charge of FTX, has "decades of experience and success in matters similar to the current FTX situation and is supervising a broad team of sophisticated professionals, including conflicts counsel."

"S&C never served as primary outside counsel to any FTX entity.  The firm had a limited and largely transactional relationship with FTX and certain affiliates prior to the bankruptcy, as is common, and is disinterested as required by the Bankruptcy Code."

FTX did not immediately respond to Insider's request for comment.


report

Recommend

About Joyk


Aggregate valuable and interesting links.
Joyk means Joy of geeK