FTX defends move to appoint law firm Sullivan & Cromwell as advisor FTX defends move to appoint law firm Sullivan & Cromwell as advisor
Separate filings from FTX CEO John Ray III and the official Committee of unsecured creditors supported the move to retain Sullivan & Cromwell.
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Updated: Jan. 18, 2023 at 12:18 pm UTC
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Bankrupt crypto exchange FTX filed a Jan. 17 response — authored by Sullivan & Cromwell (S&C) lawyers — to the objections surrounding its retention of the law firm as an advisor.
FTX said the law firm’s role at the bankrupt exchange was of “critical importance,” citing how its information sharing with U.S. prosecutors and regulators led to the charge and arrest of Sam Bankman-Fried (SBF) and his accomplices.
According to the filing, claims that S&C’s previous advisory role with the exchange could lead to a potential conflict of interest were false as it has performed a conflicts check procedure that showed it was a “disinterested person” in the case.
SBF previously accused the law firm of pressuring him to file for bankruptcy because of the potential fees it stood to earn.
FTX CEO, unsecured creditors support Sullivan & Cromwell retention
Separate Jan. 17 filings from FTX CEO John Ray III and the Official Committee of Unsecured Creditors supported the move to retain Sullivan & Cromwell.
Ray said the S&C team was essential in bringing order to a chaotic situation, adding that he has also employed a new law firm to serve as counsel on matters to which S&C might be conflicted.
Ray concluded:
“If the retention of any of S&C, Quinn or Alix were to be denied, limited or impaired for any reason, the interest of the Debtors’ customers and creditors, as well as the state and federal regulators and prosecutors with whom these advisors engage on a daily basis, would be severely, if not irreparably harmed.”
On the other hand, FTX’s unsecured creditors said the U.S. Trustee’s objections were based on a misinterpretation of the Bankruptcy code.
The creditors added that it has no objection to the retention of S&C because the law firm has performed a substantial amount of work and its efforts were integral to the cases. The creditors further argued that failure to retain the firm would not be in the best interests of the estates.
Additionally, the creditors said the firm has commenced its investigation into FTX’s downfall and “is working tirelessly to uncover the fraud in its entirety (and) recover as many assets as possible.”
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FTX is a cryptocurrency derivatives exchange that offers futures, leveraged tokens and OTC trading.
FTX
FTX is a defunct cryptocurrency exchange, currently in bankruptcy proceedings, that was founded by Sam Bankman-Fried and Zixiao “Gary” Wang in May 2019.
Sullivan & Cromwell LLP
Sullivan & Cromwell LLP is an American multinational law firm headquartered in New York City that provides a high quality legal advice and representation to clients around the world.
Sam Bankman-Fried is the former CEO, and co-founder of defunct crypto exchange FTX and Alameda Research.
John J Ray III is the Chief Restructuring Officer and now-appointed CEO of FTX, a cryptocurrency derivatives exchange.
